10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES    EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number: 1-32733

RESOURCE CAPITAL CORP.

(Exact name of registrant as specified in its charter)

Maryland	20-2287134
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
712 5th Avenue, 12th Floor, New York, New York 10019
(Address of principal executive offices) (Zip code)
(212) 506-3870
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨		Accelerated filer	þ
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ¨ Yes þ No

The number of outstanding shares of the registrant’s common stock on November 10, 2016 was 31,062,805 shares.

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

		PAGE
PART I
Item 1:	Financial Statements
	Consolidated Balance Sheets - September 30, 2016 (unaudited) and December 31, 2015	3
	Consolidated Statements of Operations (unaudited) Three and Nine Months Ended September 30, 2016 and 2015	5
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) Three and Nine Months Ended September 30, 2016 and 2015	7
	Consolidated Statement of Changes in Equity (unaudited) Nine Months Ended September 30, 2016	8
	Consolidated Statements of Cash Flows (unaudited) Nine Months Ended September 30, 2016 and 2015	9
	Notes to Consolidated Financial Statements - September 30, 2016 (unaudited)	10
Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	69
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	116
Item 4:	Controls and Procedures	117
PART II
Item 1:	Legal Proceedings	118
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	118
Item 6:	Exhibits	118
SIGNATURES		123

PART I

ITEM 1.    FINANCIAL STATEMENTS

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	September 30, 2016			December 31, 2015
	(unaudited)
ASSETS (1)
Cash and cash equivalents	$	114,552		$	78,756
Restricted cash	5,701			40,635
Investment securities, trading	3,747			25,550
Investment securities available-for-sale, pledged as collateral, at fair value	82,114			162,306
Investment securities available-for-sale, at fair value	154,591			45,782
Loans held for sale ($197.6 million and $94.5 million at fair value)	197,615			95,946
Loans, pledged as collateral and net of allowances of $9.4 million and $47.1 million	1,406,581			2,160,751
Investments in unconsolidated entities	88,149			50,030
Derivatives, at fair value	4,052			3,446
Interest receivable	6,623			14,009
Deferred tax asset, net	5,565			12,646
Principal paydown receivable	44,600			17,941
Direct financing leases, net of allowances of $0.5 million	571			931
Intangible assets	25,886			26,228
Prepaid expenses	4,615			3,180
Other assets	12,516			22,295
Total assets	$	2,157,478		$	2,760,432
LIABILITIES (2)
Borrowings	$	1,401,842		$	1,895,288
Distribution payable	17,022			17,351
Accrued interest expense	4,913			5,604
Derivatives, at fair value	2,158			3,941
Accrued tax liability	51			549
Accounts payable and other liabilities	12,933			10,939
Total liabilities	1,438,919			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; 31,071,737 and 31,562,724 shares issued and outstanding (including 496,756 and 691,369 unvested restricted shares)	31			32
Additional paid-in capital	1,218,907			1,228,346
Accumulated other comprehensive income (loss)	6,909			(2,923		)
Distributions in excess of earnings	(506,107		)	(406,603		)
Total stockholders’ equity	719,752			818,864
Non-controlling interests	(1,193		)	7,896
Total equity	718,559			826,760
TOTAL LIABILITIES AND EQUITY	$	2,157,478		$	2,760,432

3

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - (Continued)

(in thousands, except share and per share data)

	September 30, 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	5,473		39,061
Investment securities available-for-sale, pledged as collateral, at fair value	—		66,137
Loans held for sale	—		1,475
Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million	801,742		1,416,441
Interest receivable	3,389		6,592
Prepaid expenses	21		238
Principal paydown receivable	44,600		17,800
Other assets	253		833
Total assets of consolidated VIEs	$	855,478	$	1,548,672
(2) Liabilities of consolidated VIEs included in the total liabilities above:
Borrowings	$	528,971	$	1,032,581
Accrued interest expense	500		923
Derivatives, at fair value	—		3,346
Accounts payable and other liabilities	147		(117		)
Total liabilities of consolidated VIEs	$	529,618	$	1,036,733

The accompanying notes are an integral part of these statements

4

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
REVENUES
Interest income:
Loans	$	26,003		$	32,497		$	89,227		$	92,623
Securities	4,602			4,866			13,691			14,418
Leases	(22		)	(8		)	(37		)	250
Interest income - other	769			968			4,317			2,919
Total interest income	31,352			38,323			107,198			110,210
Interest expense	14,120			16,330			46,581			45,334
Net interest income	17,232			21,993			60,617			64,876
Gain (loss) on sale of residential mortgage loans	6,026			3,154			15,607			11,594
Dividend income	(188		)	17			(153		)	50
Fee income	2,023			781			1,425			4,767
Total revenues	25,093			25,945			77,496			81,287
OPERATING EXPENSES
Management fees - related party	3,053			3,252			10,189			10,312
Equity compensation - related party	1,766			(225		)	4,444			1,561
Rental operating expense	—			—			—			6
Lease operating	1			(33		)	5			14
General and administrative	12,341			10,223			33,353			29,641
Depreciation and amortization	505			628			1,650			1,814
Impairment losses	25,297			—			25,297			59
Provision (recovery) for loan and lease losses	7,683			1,034			19,819			43,834
Total operating expenses	50,646			14,879			94,757			87,241
	(25,553		)	11,066			(17,261		)	(5,954		)
OTHER INCOME (EXPENSE)
Equity in earnings of unconsolidated subsidiaries	1,032			334			5,950			1,702
Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	(10,106		)	2,457			(7,817		)	16,612
Net realized and unrealized gain (loss) on investment securities, trading	(242		)	(580		)	86			1,773
Unrealized gain (loss) and net interest income on linked transactions, net	—			—			—			235
(Loss) on reissuance/gain on extinguishment of debt	—			(332		)	—			(1,403		)
(Loss) gain on sale of real estate	31			(19		)	28			(19		)
Other income (expense)	1,500			—			1,500			—
Total other income (expense)	(7,785		)	1,860			(253		)	18,900
INCOME (LOSS) BEFORE TAXES	(33,338		)	12,926			(17,514		)	12,946
Income tax (expense) benefit	(12,283		)	1,796			(9,558		)	(2,969		)
NET INCOME (LOSS)	(45,621		)	14,722			(27,072		)	9,977

The accompanying notes are an integral part of these statements

5

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS - (Continued)

(in thousands, except share and per share data)

(unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Net (income) loss allocated to preferred shares	(6,015		)	(6,115		)	(18,077		)	(18,322		)
Carrying value in excess of consideration paid for preferred shares	—			—			1,500			—
Net (income) loss allocable to non-controlling interest, net of taxes	63			(1,829		)	213			(6,486		)
NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES	$	(51,573	)	$	6,778		$	(43,436	)	$	(14,831	)
NET INCOME (LOSS) PER COMMON SHARE – BASIC	$	(1.69	)	$	0.21		$	(1.42	)	$	(0.45	)
NET INCOME (LOSS) PER COMMON SHARE – DILUTED	$	(1.69	)	$	0.21		$	(1.42	)	$	(0.45	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC	30,528,368			32,515,226			30,513,131			32,726,194
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED	30,528,368			32,951,217			30,513,131			32,726,194

The accompanying notes are an integral part of these statements

6

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Net income (loss)	$	(45,621	)	$	14,722		$	(27,072	)	$	9,977
Other comprehensive income (loss):
Reclassification adjustment for realized (gains) losses on available-for-sale securities included in net income	—			(1,805		)	(596		)	(12,139		)
Unrealized gains (losses) on available-for-sale securities, net	6,182			(1,769		)	8,382			(345		)
Reclassification adjustments associated with unrealized (gains) losses from interest rate hedges included in net income	26			412			(29		)	538
Unrealized gains on derivatives, net	1			1,080			118			3,424
Foreign currency translation adjustments	—			(86		)	—			343
Total other comprehensive income (loss)	6,209			(2,168		)	7,875			(8,179		)
Comprehensive income (loss) before allocation to non-controlling interests and preferred shares	(39,412		)	12,554			(19,197		)	1,798
Unrealized (gains) losses on available-for-sale securities allocable to non-controlling interests	—			1,233			—			2,510
Net (income) loss allocable to non-controlling interests	63			(1,829		)	213			(6,486		)
Net (income) loss allocated to preferred shares	(6,015		)	(6,115		)	(18,077		)	(18,322		)
Carrying value in excess of consideration paid for preferred shares	—			—			1,500			—
Comprehensive income (loss) allocable to common shares	$	(45,364	)	$	5,843		$	(35,561	)	$	(20,500	)

The accompanying notes are an integral part of these statements

7

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

(in thousands, except share and per share data)

(unaudited)

	Common Stock					Preferred Shares - Series A		Preferred Shares - Series B		Preferred Shares - Series C		Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Distributions in Excess of Earnings			Total Stockholders' Equity			Non-Controlling Interests			Total Equity
	Shares		Amount
Balance, December 31, 2015	31,562,724		$	32		$	1	$	6	$	5	$	1,228,346		$	(2,923	)	$	—		$	(406,603	)	$	818,864		$	7,896		$	826,760
Deconsolidation of variable interest entities	—		—			—		—		—		—			1,957			—			(16,932		)	(14,975		)	(8,876		)	(23,851		)
Balance, January 1, 2016	31,562,724		32			1		6		5		1,228,346			(966		)	—			(423,535		)	803,889			(980		)	802,909
Proceeds from dividend reinvestment and stock purchase plan	9,423		—			—		—		—		110			—			—			—			110			—			110
Discount on 8.0% convertible senior notes	—		—			—		—		—		19			—			—			—			19			—			19
Stock based compensation	307,070		—			—		—		—		—			—			—			—			—			—			—
Amortization of stock based compensation	—		—			—		—		—		4,444			—			—			—			4,444			—			4,444
Purchase and retirement of common shares	(807,218	)	(1		)	—		—		—		(9,397		)	—			—			—			(9,398		)	—			(9,398		)
Forfeiture of unvested stock	(262	)	—			—		—		—		—			—			—			—			—			—			—
Net income (loss)	—		—			—		—		—		—			—			(26,859		)	—			(26,859		)	(213		)	(27,072		)
Preferred dividends	—		—			—		—		—		—			—			(18,077		)	—			(18,077		)	—			(18,077		)
Preferred stock redemption	—		—			—		—		—		(4,615		)	—			1,500			—			(3,115		)	—			(3,115		)
Securities available-for-sale, fair value adjustment, net	—		—			—		—		—		—			7,786			—			—			7,786			—			7,786
Designated derivatives, fair value adjustment	—		—			—		—		—		—			89			—			—			89			—			89
Distributions on common stock	—		—			—		—		—		—			—			43,436			(82,572		)	(39,136		)	—			(39,136		)
Balance, September 30, 2016	31,071,737		$	31		$	1	$	6	$	5	$	1,218,907		$	6,909		$	—		$	(506,107	)	$	719,752		$	(1,193	)	$	718,559

The accompanying notes are an integral part of these statements

8

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Nine Months Ended
	September 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(27,072	)	$	9,977
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Provision (recovery) for loan and lease losses	19,819			43,834
Depreciation, amortization, and accretion	4,471			14,109
Amortization of stock-based compensation	4,444			1,561
Provision (benefit) for deferred taxes	16,335			—
Sale (origination) of residential mortgage loans held for sale, net	(96,556		)	(403		)
Capitalization of residential mortgage servicing rights	(13,815		)	(12,520		)
Sale (purchase) of and principal payments on securities, trading, net	229			(3,120		)
Net realized and unrealized loss (gain) on investment securities, trading	(86		)	(1,773		)
Net realized and unrealized (gain) loss on sales of investment securities available-for-sale and loans	7,817			(16,612		)
Loss (gain) on the reissuance (extinguishment) of debt	—			1,403
Loss (gain) on sale of real estate	(28		)	19
Settlement of derivative instruments	(6,982		)	3,870
Net impairment losses recognized in earnings	25,297			59
Unrealized gain (loss) and net interest income on linked transactions, net	—			(235		)
Equity in net (earnings) losses of unconsolidated subsidiaries	(5,950		)	(1,702		)
Changes in operating assets and liabilities, net of acquisitions	772			(4,317		)
Net cash provided by (used in) operating activities	(71,305		)	34,150
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in restricted cash	16,816			96,887
Deconsolidation of VIEs (1)	(472		)	—
Purchase of securities available-for-sale	(6,656		)	(28,375		)
Principal payments on securities available-for-sale	36,855			59,819
Proceeds from sale of securities available-for-sale	—			60,752
Acquisition of collateralized debt obligation assets	(7,511		)	—
Proceeds from sale of Northport TRS, LLC	104,187			—
Return of capital from (investment in) unconsolidated entity	(490		)	5,625
Proceeds from sale of real estate held-for-sale	—			47
Purchase and origination of loans	(257,823		)	(629,832		)
Principal payments received on loans	362,036			294,901
Proceeds from sale of loans	9,316			108,446
Purchase of property and equipment	(28		)	(10		)
Principal payments received on loans – related parties	—			558
Settlement of derivative instruments	(147		)	8,028
Net cash (used in) provided by investing activities	256,083			(23,154		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuances of common stock and dividend reinvestment and stock purchase plan (net of offering costs of $0 and $96)	108			163
Proceeds from issuance of preferred shares (net of offering costs of $0 and $80)	—			3,033
Repurchase of common stock	(9,398		)	(15,433		)
Repurchase of preferred shares	(3,114		)	—
Net proceeds (borrowings) from repurchase agreements	195,514			(157,024		)
Proceeds from borrowings:
Securitizations	—			505,862
Convertible senior notes	—			99,000
Senior secured revolving credit facility	33,000			110,500
Reissuance of debt	—			16,597
Payments on borrowings:
Securitizations	(226,570		)	(374,778		)
Senior secured revolving credit facility	(79,000		)	(62,000		)
Payment of debt issuance costs	(1,980		)	(13,235		)
Distributions to non-controlling interest and subordinated note holders	—			(14,568		)
Proceeds received from non-controlling interests	—			3,424
Distributions paid on preferred stock	(18,144		)	(18,274		)
Distributions paid on common stock	(39,398		)	(69,433		)
Net cash provided by (used in) financing activities	$	(148,982	)	$	13,834
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	35,796			24,830
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	78,756			79,905
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	114,552		$	104,735
SUPPLEMENTAL DISCLOSURE:
Interest expense paid in cash	$	37,497		$	33,971
Income taxes paid in cash	$	4,032		$	9,518

(1) Cash and cash equivalents as of January 1, 2016 decreased by $472,000 due to the adoption of the amendments to the consolidation accounting guidance resulting in the deconsolidation of five variable interest entities (see Note 2).

The accompanying notes are an integral part of these statements

9

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

(unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Resource Capital Corp. and its subsidiaries’ (collectively the "Company") originate, purchase and manage a diversified portfolio of commercial real estate ("CRE") debt investments.  The Company’s investment activities are managed by Resource Capital Manager, Inc. ("Manager") pursuant to a management agreement (the "Management Agreement").  The Manager is a wholly-owned, indirect subsidiary of Resource America, Inc. ("Resource America") (formerly traded on NASDAQ: REXI). On September 8, 2016, Resource America was acquired by C-III Capital Partners LLC ("C-III"), a commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, collateralized debt obligation ("CDO") management, principal investment, investment sales and multifamily property management. As part of the transaction, C-III took over control of the Manager with respect to the Management Agreement and became the beneficial owner of the Company’s common shares owned by Resource America, approximately 2.3% of the Company’s outstanding shares as of September 30, 2016.

On January 1, 2016, the Company adopted the amendments to the consolidation guidance as outlined in Note 2. As a result of its evaluation, the Company determined that it is no longer the primary beneficiary of the following VIEs and, therefore, deconsolidated these entities: Resource Real Estate Funding CDO 2006-1, Ltd. ("RREF CDO 2006-1"), Resource Real Estate Funding CDO 2007-1, Ltd. ("RREF CDO 2007-1"), Apidos Cinco CDO, Ltd. ("Apidos Cinco CDO"), Pelium Capital Partners, L.P., ("Pelium Capital") and RCM Global, LLC ("RCM Global").

On July 1, 2016, the Company underwent an internal tax restructuring in order to reduce the costs associated with ownership of multiple legal entities, simplify its overall legal entity structure, ease deployment of cash throughout the business for operations and opportunities and consolidate operations into one centralized entity or group of entities. As a result of this tax restructuring, several of the Company’s directly owned subsidiaries converted from corporations to single member LLCs. Also, the following directly owned subsidiaries of the Company merged into RCC Residential Portfolio TRS, Inc. ("RCC Resi TRS") and were dissolved upon the restructuring: Long Term Care Conversion, Inc. ("LTCC") and Resource TRS II, Inc. ("Resource TRS II"). On October 1, 2016, RCC Residential, Inc. ("RCC Residential") merged into RCC Resi TRS.

The following subsidiaries are consolidated in the Company’s financial statements:

• RCC Real Estate, Inc. ("RCC Real Estate") holds real estate investments, including commercial real estate loans, commercial real estate-related securities and direct investments in real estate.  RCC Real Estate owns 100% of the equity of the following VIEs:

◦ RREF CDO 2006-1, a Cayman Islands limited liability company and qualified real estate investment trust ("REIT") subsidiary ("QRS").  RREF CDO 2006-1 was established to complete a collateralized debt obligation ("CDO") issuance secured by a portfolio of CRE loans and commercial mortgage-backed securities ("CMBS"). This entity was deconsolidated as of January 1, 2016 and the retained investment is accounted for as an investment security, available-for-sale (see Note 2) in the Company's consolidated financial statements. On April 25, 2016, RREF CDO 2006-1 was liquidated and, in exchange for the Company's interests in RREF CDO 2006-1, the remaining assets of the CDO were distributed to the Company, comprised of investment securities available-for-sale and loans held for investment, which were recorded at fair value.

◦ RREF CDO 2007-1, a Cayman Islands limited liability company and QRS.  RREF CDO 2007-1 was established to complete a CDO issuance secured by a portfolio of CRE loans and CMBS. This entity was deconsolidated as of January 1, 2016 and the retained investment is now accounted for as an investment security, available-for-sale (see Note 2) in the Company's consolidated financial statements.

◦ Resource Capital Corp. CRE Notes 2013, Ltd. ("RCC CRE Notes 2013"), a Cayman Islands limited liability company and QRS, was established to complete a CRE securitization issuance secured by a portfolio of CRE loans.

◦ Resource Capital Corp. 2014-CRE2, Ltd. ("RCC 2014-CRE2"), a Cayman Islands limited liability company and QRS, was established to complete a CRE securitization issuance secured by a portfolio of CRE loans.

◦ Resource Capital Corp. 2015-CRE3, Ltd. ("RCC 2015-CRE3"), a Cayman Islands limited liability company and QRS, was established to complete a CRE securitization issuance secured by a portfolio of CRE loans.

10

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

◦ Resource Capital Corp. 2015-CRE4, Ltd. ("RCC 2015-CRE4"), a Cayman Islands limited liability company and QRS, was established to complete a CRE securitization issuance secured by a portfolio of CRE loans.

• RCC Commercial, Inc. ("RCC Commercial") holds a 29.6% investment in NEW NP, LLC ("NEW NP, LLC"), a Delaware limited liability company, which holds bank loan investments and the Company's self-originated middle market loans, and owns 100% of the equity of the following VIE:

◦ Apidos CDO III, Ltd. ("Apidos CDO III"), a Cayman Islands limited liability company and taxable REIT subsidiary ("TRS"), was established to complete a CDO issuance secured by a portfolio of bank loans and asset-backed securities ("ABS"). On March 31, 2015, the Company issued a notice of redemption to Apidos CDO III's trustee to call the CDO. In June 2015, the Company liquidated Apidos CDO III and, as a result, all of the assets were sold.

• RCC Commercial II, Inc. ("Commercial II") holds structured notes, available-for-sale securities and investments in the subordinated notes of foreign, syndicated bank loan collateralized loan obligation ("CLO") vehicles.  Commercial II owns 100%, 68.3%, and 88.6% respectively, of the equity of the following VIEs:

◦ Apidos Cinco CDO, a Cayman Islands limited liability company and TRS, was established to complete a CDO issuance secured by a portfolio of bank loans, ABS and corporate bonds. This entity was deconsolidated as of January 1, 2016 and the retained investment is now accounted for as an investment security, available-for-sale (see Note 2). On September 28, 2016, Apidos Cinco CDO’s trustee issued a notice to call the notes issued by the CDO.

◦ Whitney CLO I, Ltd. ("Whitney CLO I"), a Cayman Islands limited liability company and TRS. In September 2013, the Company liquidated Whitney CLO I and, as a result, all of the assets were sold.

◦ Moselle CLO S.A. ("Moselle CLO"), incorporated in Luxembourg, is a CLO issuer whose assets consisted of European senior secured loans, U.S. senior secured loans, U.S. senior unsecured loans, U.S. second lien loans, European mezzanine loans, and a limited amount of synthetic securities and other eligible debt obligations. In December 2014, the Company liquidated Moselle CLO and, as a result, substantially all of the assets were sold.

• RCC Commercial III, Inc. ("Commercial III") holds bank loan investments.  Commercial III owns 90% of the equity of the following VIE:

◦ Apidos CDO I, Ltd. ("Apidos CDO I"), a Cayman Islands limited liability company and TRS was established to complete a CDO issuance secured by a portfolio of bank loans and ABS. In October 2014, the Company liquidated Apidos CLO I, and as a result, substantially all of the assets were sold.

• RSO EquityCo, LLC owned 10% of the equity of Apidos CDO I and 10% of the equity of Apidos CLO VIII, Ltd ("Apidos CLO VIII"), a Cayman Islands limited liability company and TRS.

• RCC Residential, a TRS directly owned by the Company, is a Delaware corporation which owns 100% of the following entities:

◦ Primary Capital Mortgage, LLC ("PCM"), (formerly known as Primary Capital Advisors, LLC), a limited liability company that originates and services residential mortgage loans.

◦ RCM Global Manager, LLC ("RCM Global Manager"), a Delaware limited liability company, owns 28.6% of the following entity:

▪ RCM Global, a Delaware limited liability company, holds a portfolio of investment securities, available-for-sale.This entity was deconsolidated as of January 1, 2016 and the retained investment is now accounted for as an equity method investment (see Note 2).

▪ RCC Residential Portfolio, Inc. ("RCC Resi Portfolio"), a Delaware corporation directly owned by the Company, invests in residential mortgage-backed securities ("RMBS").

▪ RCC Resi TRS, a TRS directly owned by the Company, is a Delaware corporation which was formed to hold strategic residential mortgage positions which could not be held by RCC Resi Portfolio. RCC Resi TRS also owns 100% of the equity, unless otherwise stated, in the following:

◦ RCC Residential Depositor, LLC ("RCC Resi Depositor"), a Delaware limited liability company, owns 100% of the following entity:

▪ RCC Residential Acquisition, LLC ("RCC Resi Acquisition"), a Delaware limited liability company, which was formed to purchase residential mortgage loans from PCM and transfer the assets to RCC Opportunities Trust ("RCC Opp Trust").

11

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

* RCC Opp Trust, a Delaware statutory trust, which was formed to hold a portfolio of residential mortgage loans, available-for-sale.

◦ Resource TRS III, LLC, formerly Resource TRS III, Inc. ("Resource TRS III"), a TRS directly owned by the Company, held the Company’s interests in a bank loan CDO originated by the Company.  Resource TRS III previously owned 33% of the equity of Apidos CLO VIII, which was liquidated in October 2013.

◦ Resource TRS IV, LLC, formerly Resource TRS IV, Inc. ("Resource TRS IV"), a TRS directly owned by the Company, held the Company's equity investment in hotel condominium units acquired in conjunction with a loan foreclosure. The hotel condominium units were sold in April 2014.

◦ Resource TRS V, LLC, formerly Resource TRS V, Inc., ("Resource TRS V"), a TRS directly owned by the Company, held the Company's equity investment in a held for sale condominium complex. All of the condominium units were sold as of December 31, 2013.

◦ Long Term Care Conversion Funding ("LTCC Funding"), a New York limited liability company, which provides funding through a financing facility to fund the acquisition of life settlement contracts.

◦ Life Care Funding, LLC ("LCF"), a New York limited liability company, is a joint venture between RCC Resi TRS, which owns a 70.9% equity interest, and Life Care Funding Group Partners. LCF was established for the purpose of acquiring life settlement contracts.

◦ ZWH4, LLC ("ZAIS"), a Delaware limited liability company, which owned a beneficial interest in the warehouse credit facility of ZAIS CLO 4, Limited, is a Cayman Islands exempted limited liability company, in equity form, that is used to finance the purchase of syndicated bank loans. The warehouse credit facility closed on May 5, 2016, at which time, Resource TRS III purchased a beneficial interest in ZAIS CLO 4.

◦ Resource TRS, LLC, a Delaware limited liability company, which holds a 25.8% investment in NEW NP, LLC.

◦ RCC TRS, LLC, formerly Resource TRS, Inc. ("Resource TRS"), holds the Company’s equity investment in a leasing company and holds all of its investment securities, trading (through both direct and indirect investments in such securities). Resource TRS also owns equity in the following:

▪ NEW NP, LLC holds bank loan investments and the Company's self-originated middle market loans. Resource TRS owns 44.6% of the equity in NEW NP, LLC as of September 30, 2016. An additional 29.6% of the equity is owned by RCC Commercial. NEW NP, LLC owned 100% of Northport TRS, LLC, a Delaware limited liability company, which held middle market loans. NEW NP, LLC sold its interest in Northport TRS, LLC on August 4, 2016.

▪ Pelium Capital, a Delaware limited partnership, which holds investment securities, trading. Resource TRS owns 80.2% of the equity in Pelium Capital as of September 30, 2016. This entity was deconsolidated as of January 1, 2016 and the retained investment is now accounted for as an equity method investment (see Note 2).

◦ Resource Capital Asset Management ("RCAM"), a domestic limited liability company, which is entitled to collect senior, subordinated, and incentive fees related to one remaining CLO issuer to which it provides management services through CVC Credit Partners, L.P., formerly Apidos Capital Management ("ACM"), a subsidiary of CVC Capital Partners SICAV-FIS, S.A., a private equity firm ("CVC").  Resource America, Inc. owns a 24% interest in CVC Credit Partners, L.P., ("CVC Credit Partners").

12

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reverse Stock Split and Amended and Restated Certificate of Incorporation

Effective August 31, 2015, the Company completed a one-for-four reverse stock split of its outstanding common stock. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. In addition, the Company adopted an Amended and Restated Certificate of Incorporation, which provides that its authorized capital stock consists of 125,000,000 shares of common stock, $0.001 par value per share, and 100,000,000 shares of preferred stock, $0.001 par value per share.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the accounting policies set forth in Note 2 included in our annual report on Form 10-K for the year ended December 31, 2015. The consolidated financial statements include the accounts of the Company. All inter-company transactions and balances have been eliminated.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of three months or less at the time of purchase. At September 30, 2016 and December 31, 2015, approximately $111.2 million and $74.3 million of the reported cash balances exceeded the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution, subjecting the Company to risk related to the uninsured balance. All of the Company's cash deposits are held at large, established financial institutions. 

Income Taxes

Due to changes in management’s focus regarding the non-CRE businesses, the Company determined that it no longer expects to have sufficient forecasted taxable income to completely realize the tax benefits of the gross deferred tax asset of $56.5 million (tax effected $21.9 million) as of September 30, 2016. The Company believes it will be able to utilize up to $15.4 million of the gross deferred tax asset prior to its expiration. Therefore, a gross valuation allowance of $41.1 million (tax effected expense of $16.3 million) has been recorded against the deferred tax asset as of September 30, 2016. Management will continue to assess its estimate of the amount of deferred tax asset that the Company expects to utilize. The net income tax expense recorded during the quarter ended September 30, 2016 was $12.3 million which consists of $4.0 million of tax benefits attributable to operating loss incurred during the quarter and a $16.3 million valuation allowance.

Recent Accounting Standards

In August 2016, the FASB issued new guidance to reduce the diversity in practice around the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The guidance addresses the following eight specific cash flow issues : debt prepayments or extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); settlement of zero-coupon debt instruments or other debt instruments with insignificant coupon rates; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within that reporting period. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance.

In June 2016, the FASB issued guidance which will change how credit losses for most financial assets and certain other instruments that are measured at fair value through net income are determined. The new guidance will replace the current incurred loss approach with an expected loss model for instruments measured at amortized cost. For available-for-sale debt securities, the guidance requires recording allowances rather than reducing the carrying amount, as it is currently under the other-than-temporary impairment model. It also simplifies the accounting model for credit-impaired debt securities and loans. This guidance is effective for annual reporting periods beginning after December 15, 2019, and interim periods within that reporting period. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within that reporting period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance.

13

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

In March 2016, the FASB issued guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance.

In February 2016, the FASB issued guidance requiring lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting will remain largely unchanged. The guidance will also require new qualitative and quantitative disclosures to help financial statement users better understand the timing, amount and uncertainty of cash flows arising from leases. This guidance will be effective for reporting periods beginning on or after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this guidance and its impact on our consolidated financial statements.

In January 2016, the FASB issued guidance to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments in order to provide users of financial statements with more decision-useful information. The guidance requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.  It is effective for annual reporting periods, and the interim periods within those periods, beginning after December 15, 2017 and early adoption is permitted for certain provisions. The Company is currently evaluating the effect of adoption.

In September 2015, the FASB issued guidance that simplifies the accounting for adjustments made to provisional amounts recognized in a business combination, which are currently recognized on a retrospective basis. Under the new requirements, adjustments to provisional amounts will be recognized in the reporting period in which the adjustments are determined. The effects of changes in depreciation, amortization, or other income arising from changes to the provisional amounts, if any, are included in earnings of the reporting period in which the adjustments to the provisional amounts are determined. An entity is also required to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.  It is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued guidance that simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. It is effective for annual reporting periods beginning after December 15, 2015. The Company has early adopted the provisions of this guidance. Note 12, Borrowings, reflects the presentation of debt issuance costs as prescribed by this accounting standards update. Adoption did not have a material impact on the Company's consolidated financial statements.

In February 2015, the FASB issued guidance that requires an entity to evaluate whether it should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) modify the evaluation of whether limited partnerships and similar legal entities are VIEs; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related-party relationships; and (4) provide a scope exception from

14

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015.

On January 1, 2016, the Company adopted the above guidance as required.  As a result of its re-evaluation, the Company determined it was no longer the primary beneficiary of the following VIEs and, therefore, they were deconsolidated: RREF CDO 2006-1, RREF CDO 2007-1, Apidos Cinco CDO, Pelium Capital, and RCM Global.  As a result of these deconsolidations, the Company no longer reflects the underlying collateral (loans and securities) of those VIEs in its consolidated financial statements. Instead, the Company prospectively reflects in its consolidated balance sheet, its direct investments (the "retained investments") in the issued and outstanding securities of those VIEs. The Company'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 Company's retained investments in Pelium Capital and RCM Global are accounted for as equity method investments. The Company 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.  The reduction to retained earnings represents the effect of marking the investments to market value as of the date of the adoption.

The following table summarizes the net impact of the deconsolidation of the five VIEs upon adoption on January 1, 2016 (in thousands) net of eliminations:

	Total Deconsolidated VIEs			Retained Interest as of 1/1/2016		Net Impact on Deconsolidation
ASSETS:
Cash and cash equivalents	$	472		$	—	$	472
Restricted cash	17,076			—		17,076
Loans, pledged as collateral and net of allowances (1)(2)(3)	364,589			—		364,589
Loans held for sale	1,322			—		1,322
Investment securities available-for-sale, at fair value	68,997			166,769		(97,772		)
Investment securities, trading	21,851			—		21,851
Investments in deconsolidated entities	17,250			23,175		(5,925		)
Interest receivable	4,299			—		4,299
Principal paydown receivable	17,800			—		17,800
Prepaid expenses	256			—		256
Other assets	972			—		972
Total assets	$	514,884		$	189,944	$	324,940
LIABILITIES:
Borrowings	$	297,191		$	—	$	297,191
Accrued interest expense	297			—		297
Derivative liabilities, at fair value	3,346			—		3,346
Accounts payable and other liabilities	255			—		255
Total liabilities	301,089			—		301,089
Retained earnings	206,876			189,944		16,932
Non-controlling interests	8,876			—		8,876
Accumulated other comprehensive loss	(1,957		)	—		(1,957		)
Total equity	213,795			189,944		23,851
Total liabilities and equity	$	514,884		$	189,944	$	324,940

(1) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, $40.3 million of specific reserves and $142,000 of general reserves on CRE loans were deconsolidated as of January 1, 2016.

(2) As part of the deconsolidation of Apidos Cinco CDO, $1.3 million of specific reserves on the bank loans were deconsolidated as of January 1, 2016.

(3) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, the Company deconsolidated four loans representing the senior participations in commercial real estate loans totaling $91.3 million that were previously disclosed as both impaired loans and troubled debt restructurings as of December 31, 2015.

15

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

In November 2014, the FASB issued guidance to eliminate the use of different methods in practice and thereby reduce existing diversity under GAAP in the accounting for hybrid financial instruments issued in the form of shares. An entity that issues or invests in a hybrid financial instrument is required to separate an embedded derivative feature from the host contract (for example, an underlying share) and account for the feature as a derivative according to Accounting Standards Codification ("ASC") Subtopic 815-10 on derivatives and hedging if certain criteria are met. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

In August 2014, the FASB issued guidance that clarifies the disclosures management must make in its interim and annual financial statement footnotes when management has determined that conditions exist that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued (or within one year after the date the financial statements are available to be issued when applicable). In accordance with this guidance, management’s assessment is required to be made each reporting period and should be based on relevant conditions and events that are known and reasonably knowable at the date the financial statements are issued. In all cases, to the extent that substantial doubt about the entity’s ability to continue as a going concern is determined to be probable, management must disclose the principal conditions or events that gave rise to the substantial doubt about the entity’s ability to continue as a going concern, management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, and management’s plans that either alleviate or are intended to mitigate the conditions or events that gave rise to the substantial doubt about the entity’s ability to continue as a going concern. Additionally, to the extent substantial doubt about the entity’s ability to continue as a going concern is not alleviated by management’s plans, management must indicate in the footnotes that there is substantial doubt about the entity’s ability to continue as a going concern. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effect of adoption.

In August 2014, the FASB issued guidance that provides for the election of a measurement alternative when a reporting entity determines that it is the primary beneficiary of a collateralized financing entity and, hence, is required to consolidate that collateralized financing entity. The measurement alternative allows a qualifying consolidated collateralized financing entity to use the more observable of the fair value of the financial assets or the fair value of the financial liabilities adjusted by the carrying amount of non-financial assets and the fair value of any beneficial interests retained by the reporting entity (including those beneficial interests that represent compensation for services). Alternatively, if the measurement alternative is not elected for a qualifying consolidated collateralized financing entity, this guidance requires that the financial assets and financial liabilities be measured in accordance with ASC Topic 820, and that any difference in the fair value of the financial assets and the fair value of the financial liabilities be reflected in earnings and attributed to the reporting entity in the consolidated statement of operations. This guidance was effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

Reclassifications

Certain reclassifications have been made to the 2015 consolidated financial statements to conform to the 2016 presentation.

NOTE 3 - VARIABLE INTEREST ENTITIES

The Company has evaluated its securities, loans, investments in unconsolidated entities, liabilities to subsidiary trusts issuing preferred securities (consisting of unsecured junior subordinated notes), securitizations, guarantees and other financial contracts in order to determine if they are variable interests in VIEs. The Company regularly monitors these legal interests and contracts and, to the extent it has determined that it has a variable interest, analyzes the related entity for potential consolidation. A VIE is required to be consolidated by its primary beneficiary, which, generally, is the entity that has the power to direct the activities that are most significant to the VIE and the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE. The Company continuously analyzes entities in which it holds variable interests, including when there is a reconsideration event, to determine whether such entities are VIEs and whether such potential VIEs should be consolidated or deconsolidated. This analysis requires considerable judgment.

Consolidated VIEs (the Company is the primary beneficiary)

Based on management’s analysis, the Company is the primary beneficiary of seven VIEs at September 30, 2016: Apidos CDO I, Apidos CDO III, Whitney CLO I, RCC CRE Notes 2013, RCC 2014-CRE2, RCC 2015-CRE3 and RCC 2015-CRE4 (collectively

16

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

the "Consolidated VIEs"). The Consolidated VIEs were formed on behalf of the Company to invest in real estate-related securities, CMBS, property available-for-sale, bank loans, corporate bonds and asset-backed securities and were financed by the issuance of debt securities. The Manager manages the commercial real estate-related entities on behalf of the Company, and CVC Credit Partners manages the commercial finance-related entities on behalf of the Company. By financing these assets with long-term borrowings through the issuance of bonds, the Company seeks to generate attractive risk-adjusted equity returns and to match the term of its assets and liabilities. The primary beneficiary determination for each of these VIEs was made at each VIE’s inception and is continually assessed. All of the Company's VIEs were reevaluated under the revised consolidation model effective for the Company on January 1, 2016 (see Note 2).

As of December 31, 2015, the Company was the primary beneficiary of thirteen VIEs: Apidos CDO I, Apidos CDO III, Apidos Cinco CDO, Apidos CLO VIII, RREF CDO 2006-1, RREF CDO 2007-1, Whitney CLO I, RCC CRE Notes 2013, RCC 2014-CRE2, RCC 2015-CRE3, RCC 2015-CRE4, Moselle CLO and RCM Global (collectively, the "Consolidated VIEs at December 31, 2015"). In performing the primary beneficiary analysis for the Consolidated VIEs at December 31, 2015, it was determined that the parties that have the power to direct the activities that are most significant to each of these VIEs and that had the right to receive benefits or the obligation to absorb losses that could potentially be significant to these VIEs, were a related-party group. It was then determined that the Company was the party within that group that was more closely associated with each such VIE considering the design of the VIE, the principal-agency relationship between the Company and other members of the related-party group, and the relationship and significance of the activities of the VIE to the Company compared to the other members of the related-party group. Apidos CDO I, Apidos CDO III, Apidos Cinco CDO, Apidos CLO VIII, RREF CDO 2006-1, RREF CDO 2007-1, RCC CRE Notes 2013, RCC 2014-CRE2, RCC 2015-CRE3 and RCC 2015-CRE4 were formed on behalf of the Company to invest in real estate-related securities, CMBS, property available-for-sale, bank loans, corporate bonds and asset-backed securities and were financed by the issuance of debt securities. The Manager manages the commercial real estate-related entities on behalf of the Company, and CVC Credit Partners manages the commercial finance-related entities on behalf of the Company. The primary beneficiary determination for each of these VIEs was made at each VIE’s inception and is continually assessed.

Moselle CLO was a European securitization in which the Company purchased a $30.4 million interest in the form of subordinate notes representing 100% of the Class 1 Subordinated Notes and 67.9% of the Class 2 Subordinated Notes in February 2014. The CLO was managed by an independent third-party, and such collateral management activities were determined to be the activities that most significantly impacted the economic performance of the CLO. Though neither the Company nor one of its related parties managed the CLO, due to certain unilateral kick-out rights within the collateral management agreement it was determined that the Company had the power to direct the activities that most significantly impacted the economic performance of Moselle CLO. Having both the power to direct the activities that most significantly impact Moselle CLO and a financial interest that was expected to absorb both positive and negative variability in the CLO that could potentially be significant, the Company was determined to be the primary beneficiary of Moselle CLO and, therefore, consolidated the CLO. During the fourth quarter of 2014, the CLO began the liquidation process and all assets were subsequently sold. The Company's interest in the Moselle CLO Subordinated Notes was fully redeemed in March 2016.

Whitney CLO I was a securitization in which the Company acquired rights to manage the collateral assets held by the entity in February 2011. For a discussion on the primary beneficiary analysis for Whitney, see “— Unconsolidated VIEs – Resource Capital Asset Management,” below.

For a discussion of the Company’s consolidated securitizations, see Note 1, and for a discussion of the debt issued through the securitizations, see Note 12.

For consolidated CLOs in which the Company does not own 100% of the subordinated notes, the Company imputes an interest rate using expected cash flows over the life of the CLO and records the third party's share of the cash flows as interest expense on the consolidated statements of operations.

The Company has exposure to losses on its securitizations to the extent of its subordinated debt and preferred equity interests in them. The Company is entitled to receive payments of principal and interest on the debt securities it holds and, to the extent revenues exceed debt service requirements and other expenses of the securitizations, distributions with respect to its preferred equity interests. As a result of consolidation, debt and equity interests the Company holds in these securitizations have been eliminated, and the Company’s consolidated balance sheets reflects both the assets held and debt issued by the securitizations to third parties and any accrued expense to third parties. The Company's operating results and cash flows include the gross amounts related to the securitizations' assets and liabilities as opposed to the Company's net economic interests in the securitizations. Assets and liabilities related to the securitizations are disclosed, in the aggregate, on the Company's consolidated balance sheets.

17

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The creditors of the Company’s seven consolidated VIEs have no recourse to the general credit of the Company. During the three and nine months ended September 30, 2016, the Company provided no financial support to any of its VIEs nor does it have any requirement to do so, although it may choose to do so in the future to maximize future cash flows on such investments by the Company. There are no explicit arrangements that obligate the Company to provide financial support to any of its consolidated VIEs.

The following table shows the classification and carrying value of assets and liabilities of the Company's consolidated VIEs as of September 30, 2016 (in thousands):

	Apidos I		Apidos III		Whitney CLO I		RCC CRE Notes 2013		RCC 2014-CRE2		RCC 2015-CRE3		RCC 2015-CRE4		Total
ASSETS
Restricted cash (1)	$	280	$	153	$	153	$	—	$	—	$	2,000	$	2,887	$	5,473
Loans held for investment	—		—		—		26,605		255,744		258,881		260,512		801,742
Interest receivable	—		—		—		292		1,003		1,117		977		3,389
Prepaid assets	—		—		—		6		5		5		5		21
Principal paydown receivable	—		—		—		36,600		—		8,000		—		44,600
Other assets	—		—		—		208		—		45		—		253
Total assets (2)	$	280	$	153	$	153	$	63,711	$	256,752	$	270,048	$	264,381	$	855,478
LIABILITIES
Borrowings	$	—	$	—	$	—	$	16,179	$	135,857	$	203,482	$	173,453	$	528,971
Accrued interest expense	—		—		—		25		107		209		159		500
Accounts payable and other liabilities	—		—		—		33		10		53		51		147
Total liabilities	$	—	$	—	$	—	$	16,237	$	135,974	$	203,744	$	173,663	$	529,618

(1)    Includes $2.9 million designated to fund future commitments on specific commercial real estate loans in certain of the securitizations.

(2)    Assets of each of the consolidated VIEs may only be used to settle the obligations of each respective VIE.

Unconsolidated VIEs (the Company is not the primary beneficiary, but has a variable interest)

Based on management’s analysis, the Company is not the primary beneficiary of the VIEs discussed below since it does not have both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. Accordingly, the following VIEs are not consolidated in the Company’s financial statements as of September 30, 2016. The Company’s maximum exposure to risk for each of these unconsolidated VIEs is set forth in the “Maximum Exposure to Loss” column in the table below.

RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO

RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO were formed on behalf of the Company to invest in real estate-related securities, CMBS, property available-for-sale, bank loans, corporate bonds and asset-backed securities and were financed by the issuance of debt securities. The Manager manages the commercial real estate-related entities on behalf of the Company, and CVC Credit Partners manages the commercial finance-related entities on behalf of the Company. By financing these assets with long-term borrowings through the issuance of bonds, the Company seeks to generate attractive risk-adjusted equity returns and to match the term of its assets and liabilities. The primary beneficiary determination for each of these VIEs was made at each VIE’s inception and is continually assessed. On January 1, 2016, the Company adopted the amendments to the consolidation guidance as outlined in Note 2. As a result of its evaluation, the Company determined that it was no longer the primary beneficiary of these VIEs as its investments in these vehicles do not provide the Company with a controlling financial interest. As a results of its evaluation, these investments were deconsolidated. At deconsolidation, the Company recorded its investments in RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO at fair value and accounts for these investments as investment securities available-for-sale in its consolidated financial statements. On April 25, 2016, the Company called and liquidated its investment in RREF CDO 2006-1 and, in exchange for the Company's interest in RREF CDO 2006-1, the Company distributed the remaining assets of $65.6 million at fair value after paying off the CDO debt owed to third parties of $7.5 million. The Company recognized a gain of approximately $846,000 as a result of this transaction. On September 28, 2016, Apidos Cinco CDO’s trustee issued a notice to call the CDO.

18

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

RCM Global, LLC

On July 9, 2014, RCC Residential, together with Resource America and certain Resource America employees, acquired through RCM Global a portfolio of securities from JP Morgan for $23.5 million.  The portfolio is managed by Resource America. RCC Residential contributed $15.0 million for a 63.8% membership interest. Each of the members of RCM Global is allocated revenues and expenses of RCM Global in accordance with his or her membership interest. RCM Global was determined to be a VIE based on the equity holders' inability to direct the activities that are most significant to the entity. On January 1, 2016, the Company adopted the amendments to the consolidation guidance as outlined in Note 2. Upon adoption, the Company reevaluated its variable interest in RCM Global and determined it would not be the primary beneficiary of RCM Global, as its investment in the limited liability company does not provide the Company with a controlling financial interest. As a result of its evaluation, the Company deconsolidated its investment in RCM Global. As of January 1, 2016, the Company accounted for its investment in RCM Global as an investment in an unconsolidated entity in its consolidated financial statements. As of September 30, 2016, the Company holds a 28.6% interest in RCM Global.

Pelium Capital

In September 2014, the Company contributed $17.5 million to Pelium Capital for an initial ownership interest of 80.4%. Pelium Capital is a specialized credit opportunity fund managed by Resource America. The Company funded its final commitment of $2.5 million, as of February 1, 2015. The Company will receive 10% of the carried interest in the partnership for the first five years which can increase its interest to 20% if the Company's capital contributions aggregate $40.0 million. Resource America contributed cash of $2.8 million to the formation of Pelium Capital. At December 31, 2015, Pelium Capital was accounted for as a consolidated voting interest subsidiary. On January 1, 2016, the Company adopted the amendments to the consolidation guidance as outlined in Note 2. Upon adoption, the Company reevaluated its interest in Pelium Capital and determined that although it now possessed a variable interest in Pelium Capital, it would not be the primary beneficiary of Pelium Capital, as its investment in the limited liability company does not provide the Company with a controlling financial interest. As a result of its reevaluation, the Company deconsolidated its investment in Pelium Capital on January 1, 2016, and accounted for its investment in Pelium Capital as an investment in an unconsolidated entity in its consolidated financial statements. As of September 30, 2016, the Company holds an 80.2% interest in Pelium Capital.

Pearlmark Mezzanine Realty Partners IV, L.P.

On June 24, 2015, the Company committed up to $50.0 million in Pearlmark Mezzanine Realty Partners IV, L.P. ("Pearlmark Mezz"), a Delaware limited partnership created to acquire and manage financial interests in commercial real estate property. The contractual fund manager of the fund is Pearlmark Real Estate LLC ("Pearlmark"), a Delaware limited liability company that is 50% owned by Resource America. The Company determined it possessed a variable interest Pearlmark Mezz, however, it would not be the primary beneficiary of Pearlmark Mezz, as its investment in the limited liability company does not provide the Company with a controlling financial interest. The Company will pay Pearlmark Mezz management fees of 1.0% on the unfunded committed capital and 1.5% on the invested capital. The Company is entitled to a management fee rebate of 25% for the first year of the fund. As of September 30, 2016, the Company has an investment balance of $16.8 million and a 47.7% ownership interest in the fund.

LEAF Commercial Capital, Inc.

On November 16, 2011, the Company together with LEAF Financial, Inc. ("LEAF Financial"), a subsidiary of Resource America, and LEAF Commercial Capital, Inc. (“LCC”), another subsidiary of Resource America, entered into a stock purchase agreement and related agreements (collectively the “SPA”) with Eos Partners, L.P., a private investment firm, and its affiliates (“Eos”). In exchange for its prior interests in its lease related investments, the Company received 31,341 shares of Series A Preferred Stock (the "Series A Preferred Stock"), 4,872 shares of newly issued 8% Series B Redeemable Preferred Stock (the "Series B Preferred Stock") and 2,364 shares of newly issued Series D Redeemable Preferred Stock (the "Series D Preferred Stock"), collectively representing, on a fully-diluted basis, assuming conversion, a 26.7% interest in LCC. At the time of investment, the Company’s investment in LCC was valued at $36.3 million based on a third-party valuation.  During 2013, the Company entered into a third stock purchase agreement with LCC to purchase 3,682 shares of newly issued Series A-1 Preferred Stock (the "Series A-1 Preferred Stock") for $3.7 million and 4,445 shares of newly issued Series E Preferred Stock (the "Series E Preferred Stock") for $4.4 million. The Series E Preferred Stock expired and the Company was issued additional Series A-1 Preferred Stock in exchange for its investment in the Series E Preferred Stock. The Company's fully-diluted interest in LCC, assuming conversion, was 29.0% at September 30, 2016. The Company’s investment in LCC was recorded at $44.8 million and $42.0 million as of September 30, 2016 and December 31, 2015, respectively. The Company determined that it is not the primary beneficiary of LCC because it does not participate in any management or portfolio decisions, holds only two of six board positions, and only controls 29.0% of the voting rights in the entity. Furthermore, Eos holds consent rights with

19

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

respect to significant LCC actions, including the incurrence of indebtedness, consummation of a sale of the entity, liquidation or initiating a public offering (see Note 17).

Unsecured Junior Subordinated Debentures

The Company has a 100% interest in the common shares of Resource Capital Trust I (“RCT I”) and RCC Trust II (“RCT II”), valued at $1.5 million in the aggregate (or 3% of each trust). RCT I and RCT II were formed for the purposes of providing debt financing to the Company, as described below. The Company completed a qualitative analysis to determine whether or not it is the primary beneficiary of each of the trusts and determined that it was not the primary beneficiary of either trust because it does not have the power to direct the activities most significant to the trusts, which include the collection of principal and interest and protection of collateral through servicing rights. Accordingly, neither trust is consolidated into the Company’s consolidated financial statements.

The Company records its investments in RCT I and RCT II’s common shares as investments in unconsolidated trusts using the cost method and records dividend income when declared by RCT I and RCT II. The trusts each hold subordinated debentures for which the Company is the obligor in the amount of $25.8 million for RCT I and $25.8 million for RCT II. The debentures were funded by the issuance of trust preferred securities of RCT I and RCT II. The Company will continuously reassess whether it should be deemed to be the primary beneficiary of the trusts.

Resource Capital Asset Management CLOs

In February 2011, the Company purchased a company that managed bank loan assets through five CLOs. As a result, the Company became entitled to collect senior, subordinated and incentive management fees from these CLOs. The purchase price of $22.5 million resulted in an intangible asset that was allocated to each of the five CLOs and is amortized over the expected life of each CLO. The unamortized balance of the intangible asset was $512,000 and $5.3 million at September 30, 2016 and December 31, 2015, respectively. The Company recognized fee income of $553,000 and $1.5 million for the three and nine months ended September 30, 2016, respectively. The Company recognized fee income of $791,000 and $2.7 million for the three and nine months ended September 30, 2015, respectively. With respect to four of these CLOs, the Company determined that it does not hold a controlling financial interest and, therefore, is not the primary beneficiary. One of the CLOs was liquidated in February 2013. In January 2016, a second RCAM-managed CLO was called and $2.4 million of impairment, on a pre-tax basis, was recorded in depreciation and amortization on the Company's consolidated statements of operations on the related intangible asset, as of December 31, 2015. In September 2016, the third RCAM-managed CLO was called and $1.5 million of impairment, on a pre-tax basis, was recorded in impairment losses on the Company's consolidated statements of operations on the related intangible asset, during the three months ended September, 30 2016. In September 2016, the Company recorded impairment on the one remaining CLO of $2.2 million, on a pre-tax basis, on the related intangible asset on which the Company anticipates redemption in early 2017.

With respect to the fifth CLO, Whitney CLO I, in October 2012, the Company purchased 66.6% of its preferred equity, which resulted in consolidation. Based upon that purchase, the Company determined that it had an obligation to absorb losses and/or the right to receive benefits that could potentially be significant to Whitney CLO I and that a related party had the power to direct the activities that are most significant to the VIE. As a result, together with the related party, the Company had both the power to direct and the right to receive benefits and the obligation to absorb losses. It was then determined that, between the Company and the related party, the Company was the party within that group that was more closely associated with Whitney CLO I because of its preferred equity interest in Whitney CLO I. The Company, therefore, consolidated Whitney CLO I. In May 2013, the Company purchased additional equity in this CLO which increased its ownership of the outstanding preferred equity to 68.3%. In September 2013, the Company liquidated Whitney CLO I, and, as a result, all of the assets were sold.

Investment in ZAIS

In February 2015, the Company made an investment in ZAIS CLO 4 Limited, an offshore financing vehicle created to acquire and warehouse syndicated bank loans, through its wholly-owned, indirect subsidiary ZAIS and through its unconsolidated subsidiary Pelium Capital together with a Resource America employee. The Company, through ZAIS and Pelium Capital, committed to invest $10.0 million and $3.0 million, respectively, during the vehicle's warehousing period. The warehouse credit facility closed on May 5, 2016, at which time, Resource TRS III purchased a beneficial interest in ZAIS CLO 4. The vehicle is managed by ZAIS Leveraged Loan Manager 4, LLC (the “Collateral Manager”), an entity unrelated to the Company or to Pelium Capital, and such collateral management activities were determined to be the activities that most significantly impacted the economic performance of the entity. The Collateral Manager can be replaced either for cause by the entity’s administrative agent if there is an event of default or by a unanimous vote of the entity’s equity investors, excluding any preference shares held by the Collateral Manager or its affiliates. Although the Company has an investment in the entity that is potentially significant, because it was determined that the Company did not have

20

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

the ability to kick out the collateral manager, the Company was not determined to be the primary beneficiary and, hence, not required to consolidate ZAIS CLO 4. As of September 30, 2016, the Company had a beneficial interest of $10.6 million in ZAIS CLO 4. The Company accounts for its investment in ZAIS CLO 4 as an investment security available-for-sale in its consolidated financial statements.

Investments in the Harvest CLO Securities

In September 2013 and March 2014, the Company made investments in Harvest CLO VII Limited and Harvest CLO VIII Limited (collectively, the “Harvest Securities”), respectively, offshore limited liability companies created to acquire syndicated bank loans and issue collateral loan obligations, through its wholly-owned, direct subsidiary Commercial II.  The Harvest Securities are managed by 3i Debt Management Investments Limited (the “Portfolio Manager”), an entity unrelated to the Company, and such collateral management activities were determined to be the activities that most significantly impacted the economic performance of the entity.  The Portfolio Manager can be replaced only for cause by the Harvest Securities’ trustee.  Although the Company has investments in the Harvest Securities that are potentially significant, because it was determined that the Company did not have the ability to unilaterally kick out the Portfolio Manager, the Company was not determined to be the primary beneficiary and, hence, not required to consolidate the Harvest Securities. As of September 30, 2016, the Company had investments of $4.4 million in Harvest CLO VII Limited and $5.2 million in Harvest CLO VIII Limited. The Company accounts for its investments in the Harvest Securities as investment securities available-for-sale in its consolidated financial statements.

Investment in Harvest CLO XV Designated Activity Company

In September 2015, the Company made an investment in Harvest CLO XV Designated Activity Company ("Harvest XV"), an offshore financing vehicle created to acquire and warehouse syndicated bank loans, through its wholly-owned, direct subsidiary Commercial II. In May 2016, the warehouse closed and the Company invested in Harvest CLO XV DAC ("Harvest CLO XV"). The CLO is managed by the Portfolio Manager, and such collateral management activities were determined to be the activities that most significantly impacted the economic performance of the entity. The Portfolio Manager can be replaced only for cause by the entity’s administrative agent. Although the Company has an investment in the entity that is potentially significant, because it was determined that the Company did not have the ability to unilaterally kick out the collateral manager, the Company was not determined to be the primary beneficiary and, hence, not required to consolidate Harvest CLO XV. As of September 30, 2016, the Company's investment in Harvest CLO XV is $14.0 million. The Company accounts for its investment in Harvest CLO XV as an investment security available-for-sale in its consolidated financial statements.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs as of September 30, 2016 (in thousands):

	Unconsolidated Variable Interest Entities
	LCC		Unsecured Junior Subordinated Debentures			RCAM Managed CDOs		Investment in ZAIS CLO		Investment in Harvest CLOs		RREF CDO 2007-1		Apidos Cinco CDO		RCM Global LLC		Pelium Capital		Pearlmark Mezz		Total		Maximum Exposure to Loss
Investments in unconsolidated entities	$	44,777	$	1,548		$	—	$	—	$	—	$	—	$	—	$	306	$	24,767	$	16,751	$	88,149	$	88,149
Investment securities, available-for-sale	—		—			—		10,619		23,590		94,353		20,012		—		—		—		148,574		$	148,574
Intangible assets	—		—			512		—		—		—		—		—		—		—		512		$	512
Total assets	44,777		1,548			512		10,619		23,590		94,353		20,012		306		24,767		16,751		237,235
Borrowings	—		51,548			—				—		—		—		—		—		—		51,548		N/A
Total liabilities	—		51,548			—				—		—		—		—		—		—		51,548		N/A
Net asset (liability)	$	44,777	$	(50,000	)	$	512	$	10,619	$	23,590	$	94,353	$	20,012	$	306	$	24,767	$	16,751	$	185,687	N/A

As of September 30, 2016, there were no explicit arrangements or implicit variable interests that could require the Company to provide financial support to any of its unconsolidated VIEs.

21

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosure of cash flow information is summarized for the periods indicated (in thousands):

	For the Nine Months Ended
	September 30,
	2016			2015
Non-cash operating activities include the following:
Reclassification of linked transactions, net at fair value to investment securities available-for-sale, pledged as collateral, at fair value and borrowings (1)	$	—		$	15,367
Interest expense paid by third party (2)	$	(107	)	$	—
Operating liabilities assumed by third party (2)	$	(192	)	$	—
Non-cash investing activities include the following:
Reclassification of linked transactions, net at fair value to investment securities available-for-sale, pledged as collateral, at fair value (1)	$	—		$	48,764
Retained beneficial interest in unconsolidated securitization entities	$	(22,476	)	$	—
Loans acquired through collateralized debt obligation liquidation	$	(44,893	)	$	—
Securities acquired through collateralized debt obligation liquidation	$	(20,837	)	$	—
Non-cash financing activities include the following:
Distributions on common stock accrued but not paid	$	13,012		$	20,667
Distributions on preferred stock accrued but not paid	$	4,010		$	4,077
Reclassification of linked transactions, net at fair value to borrowings (1)	$	—		$	33,397
Senior secured revolving credit facility assumed by third party (2)	$	(122,000	)	$	—
Senior secured revolving credit facility paid down by third party (2)	$	(22,000	)	$	—

(1) As a result of an accounting standards update adopted on January 1, 2015, the Company unlinked its previously linked transactions, resulting in non-cash increases in both its investment securities available-for-sale, pledged as collateral, at fair value and related repurchase agreements borrowings balances.

(2) On August 4, 2016, the Company completed the sale of Northport TRS, LLC. The Purchaser assumed $122.0 million and paid down $22.0 million of principal and $107,000 of interest expense on the Company’s behalf of the senior secured revolving credit agreement. The Purchaser assumed $192,000 of accounts payable and accrued legal fees recorded to complete the sale. See Note 7.

NOTE 5 - INVESTMENT SECURITIES, TRADING

Structured notes are CLO debt securities collateralized by syndicated bank loans, and RMBS is a type of mortgage-backed debt obligation whose cash flows come from residential mortgage debt. The following table summarizes the Company's structured notes and RMBS that are classified as investment securities, trading and carried at fair value (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
As of September 30, 2016:
Structured notes	$	5,914	$	419	$	(2,586	)	$	3,747
Total	$	5,914	$	419	$	(2,586	)	$	3,747
As of December 31, 2015:
Structured notes	$	28,576	$	1,674	$	(4,700	)	$	25,550
RMBS	1,896		—		(1,896		)	—
Total	$	30,472	$	1,674	$	(6,596	)	$	25,550

22

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

As a result of updated accounting guidance, effective January 1, 2016 (see Note 2), the Company deconsolidated all of the assets of Pelium Capital, resulting in the removal of $21.9 million of investment securities, trading from its balance sheet, which is the primary cause of the decrease of securities during the period. The Company sold no investment securities during the three and nine months ended September 30, 2016. The Company sold nine and 19 investment securities during the three and nine months ended September 30, 2015 for a net realized gain of approximately $750,000 and $1.4 million, respectively. The Company held six and 56 investment securities, trading as of September 30, 2016 and December 31, 2015, respectively.

NOTE 6 - INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The following table summarizes the Company's investment securities, including those pledged as collateral and classified as available-for-sale. ABS may include, but are not limited to the Company's investments in RREF CDO 2007-1, Apidos Cinco CDO, Harvest CLO Securities, ZAIS and other securities backed by syndicated bank loans, and other loan obligations. These securities are carried at fair value (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value(1)
As of September 30, 2016:
ABS	$	149,320	$	3,975	$	(149	)	$	153,146
CMBS	82,595		477		(1,311		)	81,761
RMBS	1,624		174		—			1,798
Total	$	233,539	$	4,626	$	(1,460	)	$	236,705
As of December 31, 2015:
ABS	$	41,994	$	3,218	$	(998	)	$	44,214
CMBS	158,584		2,631		(1,791		)	159,424
RMBS	2,156		122		(88		)	2,190
Corporate bonds	2,422		—		(162		)	2,260
Total	$	205,156	$	5,971	$	(3,039	)	$	208,088

(1) As of September 30, 2016 and December 31, 2015, $82.1 million and $162.3 million, respectively, of investment securities available-for-sale were pledged as collateral under related financings.

As a result of updated accounting guidance, effective January 1, 2016 (see Note 2), the Company deconsolidated all of the assets of RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO, resulting in the removal of $364.6 million of loans, pledged as collateral from its balance sheet. These investments are now recorded as investment securities available-for-sale.

23

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The following table summarizes the estimated maturities of the Company’s CMBS, RMBS, ABS and corporate bonds according to their estimated weighted average life classifications (in thousands, except percentages):

Weighted Average Life	Fair Value			AmortizedCost		Weighted Average Coupon
As of September 30, 2016:
Less than one year	$	178,357	(1)	$	179,516	6.29%
Greater than one year and less than five years	15,886			15,489		4.27%
Greater than five years and less than ten years	25,289			22,477		9.98%
Greater than ten years	17,173			16,057		8.74%
Total	$	236,705		$	233,539	6.68%
As of December 31, 2015:
Less than one year	$	117,221	(1)	$	118,215	7.13%
Greater than one year and less than five years	71,370			68,808		5.31%
Greater than five years and less than ten years	12,382			11,271		10.45%
Greater than ten years	7,115			6,862		16.85%
Total	$	208,088		$	205,156	7.03%

(1) The Company expects that the maturity dates of these CMBS and ABS will either be extended or that they will be paid in full.

At September 30, 2016, the contractual maturities of the CMBS investment securities available-for-sale range from October 2016 to December 2022.  The contractual maturity date of RMBS investment securities available-for-sale is June 2029. The contractual maturities of the ABS investment securities available-for-sale range from November 2016 to September 2046.

The following table shows the fair value, gross unrealized losses and number of securities aggregated by investment category and length of time, for those individual investment securities available-for-sale that have been in a continuous unrealized loss position during the periods specified (in thousands, except number of securities):

	Less than 12 Months						More than 12 Months						Total
	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair  Value		Unrealized Losses			Number of Securities
As of September 30, 2016:
ABS	$	1,066	$	(147	)	2	$	40	$	(2	)	1	$	1,106	$	(149	)	3
CMBS	37,798		(950		)	17	13,937		(361		)	5	51,735		(1,311		)	22
RMBS	—		—			—	—		—			—	—		—			—
Total temporarily impaired securities	$	38,864	$	(1,097	)	19	$	13,977	$	(363	)	6	$	52,841	$	(1,460	)	25
As of December 31, 2015:
ABS	$	2,330	$	(824	)	5	$	668	$	(174	)	5	$	2,998	$	(998	)	10
CMBS	79,570		(849		)	31	13,783		(942		)	15	93,353		(1,791		)	46
RMBS	1,157		(88		)	2	—		—			—	1,157		(88		)	2
Corporate bonds	65		(18		)	1	1,327		(144		)	1	1,392		(162		)	2
Total temporarily impaired securities	$	83,122	$	(1,779	)	39	$	15,778	$	(1,260	)	21	$	98,900	$	(3,039	)	60

The unrealized losses in the above table are considered to be temporary impairments due to market factors and are not reflective of credit deterioration.

24

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

During the three and nine months ended September 30, 2016, the Company recognized $21.6 million of other-than-temporary impairment on its investment securities available-for-sale.

Of this amount, $20.7 million relates to the Company’s previously consolidated CRE CDO, RREF 2007-1, which is classified as an investment security available-for-sale. The Company’s security interest in the vehicle is supported by 12 CMBS securities and seven CRE loans. As part of the Company's ongoing credit evaluation of its investment securities, third-party appraisals were obtained on six of the seven remaining legacy CRE loans, which are part of the asset pool of the vehicle. The remaining loan was under an agreement of sale. As a result of having the properties supporting the loans appraised, two of the CRE loans in the vehicle were determined to have cost bases in excess of their expected cash flows, as a result of the updated appraisals, causing a collective impairment charge to the cash flows of the vehicle of $20.7 million. The impairment charge on the security reflects the credit impact to the fair value of the security given the results of the updated appraisals and reduces the Company's cost basis in the security permanently. The impairment charge was calculated by comparing the previous projected cash flows of the security to the revised cash flows including the results of the updated appraisals.

The Company recorded other-than-temporary impairment of $241,000 on three positions classified as securities available-for-sale, RMBS during the three and nine months ended September 30, 2016 after it was determined the Company would not be able to recover the full cost basis of these positions due to declines in the future projected cash flows of the securities.

One CMBS position classified as a security available for sale with a par balance of $4.0 million was identified as a position the Company would be required to sell before it could recover its cost basis in the security. As such, the Company recorded the difference between its amortized cost basis and the estimated fair value. Other-than-temporary impairment of $732,000 was recognized during the three and nine months ended September 30, 2016, as a result of the anticipated sale of this security.

During the three and nine months ended September 30, 2015, the Company recognized no other-than-temporary impairment on its investment securities available-for-sale.

The following table summarizes the Company's sales of investment securities available-for-sale (in thousands, except number of securities):

	For the Three Months Ended						For the Nine Months Ended
	Positions Sold	Positions Redeemed	Par Amount Sold/Redeemed		Realized Gain (Loss)		Positions Sold	Positions Redeemed	Par Amount Sold/Redeemed		Realized Gain (Loss)
September 30, 2015:
ABS	8	—	$15,462		$2,437		15	3	$	31,399	$	10,547
RMBS	—	—	$	—	$	—	6	—	$	28,305	$	984

There were no sales or redemptions during the three and nine months ended September 30, 2016.

25

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 7 - LOANS

The following is a summary of the Company’s loans (in thousands):

Loan Description	Principal			Unamortized (Discount) Premium, net (1)			Carrying Value (2) (3)
As of September 30, 2016:
CRE whole loans	$	1,367,998		$	(6,815	)	$	1,361,183
Mezzanine loans (5)	—			—			—
Middle market loans	51,850			(311		)	51,539
Residential mortgage loans, held for investment	3,292			—			3,292
Subtotal loans before allowance	1,423,140			(7,126		)	1,416,014
Allowance for loan loss	(9,433		)	—			(9,433		)
Total loans held for investment, net of allowance	1,413,707			(7,126		)	1,406,581
Middle market loans held for sale	7,182			—			7,182
Residential mortgage loans held for sale, at fair value (4)	190,433			—			190,433
Total loans held for sale	197,615			—			197,615
Total loans, net	$	1,611,322		$	(7,126	)	$	1,604,196
As of December 31, 2015:
Commercial real estate loans:
Whole loans	$	1,640,744		$	(9,943	)	$	1,630,801
B notes	15,934			—			15,934
Mezzanine loans	45,368			4			45,372
Total commercial real estate loans	1,702,046			(9,939		)	1,692,107
Bank loans	134,890			(373		)	134,517
Middle market loans	380,687			(1,235		)	379,452
Residential mortgage loans, held for investment	1,746			—			1,746
Subtotal loans before allowance	2,219,369			(11,547		)	2,207,822
Allowance for loan loss	(47,071		)	—			(47,071		)
Total loans held for investment, net of allowance	2,172,298			(11,547		)	2,160,751
Bank loans held for sale	1,475			—			1,475
Residential mortgage loans held for sale, at fair value (4)	94,471			—			94,471
Total loans held for sale	95,946			—			95,946
Total loans, net	$	2,268,244		$	(11,547	)	$	2,256,697

(1) Amounts include deferred amendment fees of $12,000 being amortized over the life of the loans as of September 30, 2016. Amounts include deferred amendment fees of $42,000 and deferred upfront fees of $12,000 being amortized over the life of the loans as of December 31, 2015.  Amounts also include loan origination fees of $6.7 million and $9.9 million as of September 30, 2016 and December 31, 2015, respectively.

(2) As a result of the consolidation guidance adopted January 1, 2016, the Company deconsolidated loans held for investment in the amount of $271.8 million of its CRE loans and $134.5 million of its bank loans and the related allowance for loan losses of $41.7 million (see Note 2).

(3) Substantially all loans are pledged as collateral under various borrowings as of September 30, 2016 and December 31, 2015, respectively.

(4) Amortized cost approximates fair value.

(5) As a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, a mezzanine loan with a par value of $28.8 million was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero as of September 30, 2016.

26

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Commercial Real Estate Loans

The following is a summary of the Company's commercial real estate loans held for investment (in thousands):

Description	Quantity	Amortized Cost		Contracted Interest Rates	Maturity Dates(3)
As of September 30, 2016:
Whole loans, floating rate (1)(3) (4) (5) (6) (7)	76	$	1,361,183	LIBOR plus 2.50% to LIBOR plus 6.45%	January 2017 to October 2019
Mezzanine loans (10)	1	—		N/A	September 2021
Total (2) (9)	77	$	1,361,183
As of December 31, 2015:
Whole loans, floating rate(1) (3) (4) (5) (6) (7)	87	$	1,630,801	LIBOR plus 1.75% to LIBOR plus 12.00%	February 2016 to February 2019
B notes, fixed rate	1	15,934		8.68%	April 2016
Mezzanine loans, fixed rate (8)	2	45,372		9.01%	September 2016
Total (2)	90	$	1,692,107

(1) Whole loans had $67.3 million and $112.6 million in unfunded loan commitments as of September 30, 2016 and December 31, 2015, respectively.  These unfunded commitments are advanced as the borrowers formally request additional funding as permitted under the loan agreement and any necessary approvals have been obtained.

(2) Totals do not include allowances for loan losses of $9.4 million and $41.8 million as of September 30, 2016 and December 31, 2015, respectively.

(3) Maturity dates do not include possible extension options that may be available to the borrowers.

(4) Includes two whole loans with a combined $11.2 million and $51.2 million senior component as of September 30, 2016 and December 31, 2015, respectively, that entered into modifications in 2016 and 2015 that resulted in a fixed rate of 0.50% as of September 30, 2016 and December 31, 2015, respectively (the difference of which was a result of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1 - see Note 2). The two loans were previously identified as troubled debt restructurings ("TDR's").

(5) Includes four whole loans with a combined $4.5 million in mezzanine components that have interest rates ranging from 1.5% to 5.2% as of September 30, 2016 and December 31, 2015.

(6) Includes a $799,000 junior mezzanine tranche of a whole loan that has a fixed rate of 10.0% as of September 30, 2016 and December 31, 2015.

(7) Contracted interest rates do not include a whole loan with an amortized cost of $2.0 million and $32.5 million as of September 30, 2016 and December 31, 2015, respectively, that entered into modifications in 2016 and 2015 which reduced the floating rate spread to 1.00% as of September 30, 2016 and December 31, 2015, respectively (the difference of which was a result of the deconsolidation of RREF CDO 2007-1 - see Note 2). The loan was previously identified as a TDR.

(8) Contracted interest rates and maturity dates do not include rates or maturity dates associated with one loan with an amortized cost of $38.1 million that was fully reserved as of June 30, 2015.

(9) As a result of updated accounting guidance, effective January 1, 2016 (see Note 2), the Company deconsolidated all of the assets of RREF CDO 2006-1 and RREF CDO 2007-1, resulting in the removal of $271.8 million of loans pledged as collateral from its balance sheet.

(10) As a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, a mezzanine loan with a par value of $28.8 million was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero at September 30, 2016. The mezzanine loan is comprised of two tranches, with maturity dates of November 2016 and September 2021.

27

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The following is a summary of maturity of the Company’s commercial real estate loans, at amortized cost (in thousands):

Description	2016		2017		2018 and Thereafter		Total
As of September 30, 2016:
Whole loans	$	—	$	44,770	$	1,316,413	$	1,361,183
Mezzanine loans (2)	—		—		—		—
Total (1)	$	—	$	44,770	$	1,316,413	$	1,361,183
As of December 31, 2015:	2016		2017		2018 and Thereafter		Total
B notes	$	15,934	$	—	$	—	$	15,934
Mezzanine loans	13,011		—		32,361		45,372
Whole loans	9,958		140,712		1,480,131		1,630,801
Total (1)	$	38,903	$	140,712	$	1,512,492	$	1,692,107

(1) Contractual maturity of commercial real estate loans assumes full exercise of extension options available to borrowers.

(2) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF CDO 2006-1.

At September 30, 2016, approximately 30.4%, 24.3% and 7.2% of the Company's commercial real estate loan portfolio was concentrated in Texas, California, and Georgia, respectively. At December 31, 2015, approximately 28.7%, 26.8%, and 7.4% of the Company's commercial real estate loan portfolio was concentrated in California, Texas, and Georgia, respectively.

Bank Loans

The following table provides information as to the lien position and status of the Company's bank loans, at amortized cost (in thousands) prior to deconsolidation of Apidos Cinco CDO as of January 1, 2016 (see Note 2):

	Apidos I		Apidos Cinco		Total
As of December 31, 2015:
Loans held for investment:
First lien loans	$	—	$	131,281	$	131,281
Second lien loans	—		1,692		1,692
Defaulted first lien loans	—		1,544		1,544
Defaulted second lien loans	—		—		—
Total	—		134,517		134,517
First lien loans held for sale at fair value	153		1,322		1,475
Total	$	153	$	135,839	$	135,992

At September 30, 2016, the Company held no bank loans. At December 31, 2015, the Company’s bank loan portfolio, including loans held for sale, consisted of $134.7 million (net of allowance of $1.3 million) of floating rate loans, which bear interest rates ranging between the three month LIBOR plus 1.25% and the three month LIBOR plus 8% with maturity dates ranging from January 2016 to August 2021.  

28

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The following is a summary of the weighted average maturity of the Company’s bank loans, at amortized cost and loans held-for-sale, at the lower of cost or market (in thousands):

	December 31, 2015
Less than one year	$	3,922
Greater than one year and less than five years	128,480
Five years or greater	3,590
Total	$	135,992

At December 31, 2015, approximately 13.5%, 13.0% and 9.6% of the Company’s bank loan portfolio was concentrated in the collective industry grouping of automobile, diversified/conglomerate service and retail stores, respectively.

Middle Market Loans    

The following table provides information as to the lien position and status of the Company's middle market loans, at carrying value (in thousands):            

	September 30, 2016		December 31, 2015
First Lien	$	—	$	248,367
Second Lien	51,539		127,146
First lien loans held for sale, at fair value - defaulted	4,625		—
Second lien loans held for sale, at fair value	2,557		—
Total	$	58,721	$	375,513

On August 4, 2016, the Company completed the sale of Northport TRS, LLC to CVC Credit Partners and other third parties ("Purchaser") for $247.0 million. The transaction included substantially all of the direct origination middle market loans and one syndicated loan with a par balance of $257.3 million. The Purchaser assumed $122.0 million and paid down $22.0 million on the Company's behalf, of the senior secured revolving credit agreement, for net proceeds of approximately $104.2 million, including repayment of an intercompany loan. The Company retained the remaining broadly syndicated middle market loans and one direct origination middle market loan. See Note 4.

At September 30, 2016, the Company’s middle market loan portfolio consisted of $58.7 million of floating rate loans, which bear interest rates ranging between one or three month LIBOR plus 6.75% and one or three month LIBOR plus 9.00% with maturity dates ranging from December 2018 to July 2023.  

At December 31, 2015, the Company’s middle market loan portfolio consisted of $375.5 million (net of allowance of $3.9 million) of floating rate loans, which bore interest ranging between one or three month LIBOR plus 6.25% and three month LIBOR plus 12.00% with maturity dates ranging from December 2016 to July 2023.  

The following is a summary of the weighted average maturity of the Company’s middle market loans, at carrying value (in thousands):

	September 30, 2016		December 31, 2015
Less than one year	$	—	$	14,960
Greater than one year and less than five years	20,274		250,709
Five years or greater	38,447		109,844
Total	$	58,721	$	375,513

At September 30, 2016 approximately 17.8% of the Company's middle market loan portfolio was concentrated in the collective industry grouping of beverage, food and tobacco and 16.8% of the Company's middle market loan portfolio was concentrated in the collective industry grouping of healthcare, education, and childcare.

29

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

At December 31, 2015, approximately 12.8% of the Company's middle market loan portfolio was concentrated in the collective industry grouping of diversified and conglomerate service and 12.4% of the Company's middle market loan portfolio was concentrated in the collective industry grouping of healthcare, education, and childcare.

Residential Mortgage Loans

The Company originates and services residential mortgage loans through its indirect wholly-owned subsidiary PCM. PCM is an approved seller/servicer for the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association and is licensed to originate loans insured by the Federal Housing Administration, the Department of Veterans Affairs and the United States Department of Agriculture. PCM is licensed to transact business in 41 states. In order to maintain its licenses and status as an approved seller/servicer, PCM must meet certain capital requirements. PCM was in compliance with those capital requirements as of September 30, 2016.

Residential mortgage loans held for sale, at fair value, consisted of $138.2 million and $52.2 million of agency-conforming and jumbo mortgage loans, respectively, as of September 30, 2016. Residential mortgage loans held for sale, at fair value, consisted of $29.2 million and $65.3 million of agency-conforming and jumbo mortgage loans (net of allowance of $11,000), respectively, as of December 31, 2015.

During the quarter ended September 30, 2016, approximately 39.5% of the Company's residential mortgage loans were originated in Georgia, 16.5% in California, 14.9% in Utah, 5.9% in Virginia, and 5.4% in Florida. During the year ended December 31, 2015, approximately 44.9% of the Company's residential mortgage loans were originated in Georgia, 11.2% in Utah, 9.1% in Virginia, 4.4% in Florida, and 4.1% in Colorado.

Allowance for Loan Losses

The following is a summary of the allocation of the allowance for loan loss with respect to the Company's loans (in thousands, except percentages) by asset class (in thousands):

Description	Allowance for Loan Loss		Percentage of Total Allowance
As of September 30, 2016:
CRE whole loans	$	9,422	99.88%
Mezzanine loans (2)	—		—%
Residential mortgage loans	11		0.12%
Total (1)	$	9,433
As of December 31, 2015:
B notes	$	15	0.03%
Mezzanine loans	38,079		80.90%
CRE whole loans	3,745		7.96%
Bank loans	1,282		2.72%
Middle market loans	3,939		8.37%
Residential mortgage loans	11		0.02%
Total	$	47,071

(1) As a result of amendments to consolidation accounting guidance adopted January 1, 2016, the Company deconsolidated loans held for investment in the amount of $271.8 million of its CRE loans and $134.5 million of its bank loans and the related allowance for loan losses of $41.7 million (see Note 2).

(2) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF CDO 2006-1.

Principal Paydown Receivables

Principal paydown receivables represent the portion of the Company's loan portfolio for which indication has been provided through its various servicers, trustees, or its asset management group that a payoff or paydown of a loan has been received but which, as of period end, the Company has not received and applied to the outstanding loan balance. At September 30, 2016,

30

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

the Company had $44.6 million principal paydown receivables, the entirety of which the Company received in cash during October 2016. At December 31, 2015, principal paydown receivables relating to the Company's loan portfolio totaled $17.9 million, the entirety of which the Company received in cash during January 2016.

NOTE 8 - INVESTMENTS IN UNCONSOLIDATED ENTITIES

The following table shows the Company's investments in unconsolidated entities as of September 30, 2016 and December 31, 2015 and equity in earnings of unconsolidated subsidiaries for the three and nine months ended September 30, 2016 and 2015 (in thousands):

						Equity in Earnings of Unconsolidated Subsidiaries
		Balance as of		Balance as of		For the three months ended			For the nine months ended			For the three months ended			For the nine months ended
	Ownership %	September 30, 2016		December 31, 2015		September 30, 2016			September 30, 2016			September 30, 2015			September 30, 2015
RRE VIP Borrower, LLC (1)	—%	$	—	$	—	$	—		$	35		$	—		$	46
Investment in LCC Preferred Stock	29.0%	44,777		42,017		415			2,759			961			1,362
Investment in CVC Global Credit Opportunities Fund (2)	—%	—		—		—			—			(628		)	293
Pearlmark Mezz (3)	47.7%	16,751		6,465		132			552			—			—
RCM Global, LLC(4)	28.6%	306		—		(560		)	(160		)	—			—
Pelium Capital Partners, L.P. (4)	80.2%	24,767		—		1,045			2,765			—			—
Investment in School Lane House (5)		—		—		—			(1		)	1			1
Subtotal		86,601		48,482		1,032			5,950			334			1,702
Investment in RCT I and II (6)	3.0%	1,548		1,548		(636		)	(1,928		)	(610		)	(1,805		)
Total		$	88,149	$	50,030	$	396		$	4,022		$	(276	)	$	(103	)

(1) The investment in RRE VIP Borrower was sold as of December 31, 2014. Earnings for the three and nine months ended September 30, 2016 and 2015 are related toinsurance premium and property tax refunds and the liquidation of bank accounts with respect to the underlying sold properties of the portfolio.

(2) In December 2015, the Company elected a full redemption of its remaining investment in the fund.

(3) The Company has committed to invest up to $50.0 million in Pearlmark Mezzanine Realty Partners IV, L.P. The commitment termination date ends the earlier of when the original commitment is fully funded, or the fifth anniversary following the final closing date of June 24, 2015.

(4) Pursuant to the new consolidation guidance adopted January 1, 2016, these previously consolidated VIEs are now accounted for under the equity method.

(5) Investment in School Lane House was sold as of December 31, 2014. Earnings for the three and nine months ended September 30, 2016 and 2015 related to the return of a security deposit and payment of an insurance claim.

(6) For the three and nine months ended September 30, 2016 and 2015, these amounts are recorded in interest expense on the Company's consolidated statements of operations.

31

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 9 - FINANCING RECEIVABLES

The following tables show the allowance for loan and lease losses and recorded investments in loans and leases for the years indicated (in thousands):

	Commercial Real Estate Loans			Bank Loans			Middle Market Loans			Residential Mortgage Loans			Direct Financing Leases		Total
As of September 30, 2016:
Allowance for Loan and Leases Losses:
Allowance for losses at January 1, 2016	$	41,839		$	1,282		$	3,939		$	11		$	465	$	47,536
Provision (recovery) for loan and lease losses	7,997			(358		)	12,180			—			—		19,819
Loans charged-off	—			358			(16,119		)	—			—		(15,761		)
Deconsolidation of VIEs	(40,414		)	(1,282		)	—			—			—		(41,696		)
Allowance for losses at September 30, 2016	$	9,422		$	—		$	—		$	11		$	465	$	9,898
Ending balance:
Individually evaluated for impairment	$	8,059		$	—		$	—		$	—		$	465	$	8,524
Collectively evaluated for impairment	$	1,363		$	—		$	—		$	11		$	—	$	1,374
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
Loans and Leases:
Ending balance:
Individually evaluated for impairment	$	38,133		$	—		$	51,539		$	—		$	1,036	$	90,708
Collectively evaluated for impairment	$	1,323,050		$	—		$	—		$	3,292		$	—	$	1,326,342
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
As of December 31, 2015:
Allowance for Loan and Lease Losses:
Allowance for losses at January 1, 2015	$	4,043		$	570		$	—		$	—		$	—	$	4,613
Provision for loan and lease losses	37,735			2,887			8,901			(99		)	465		49,889
Loans charged-off	—			(2,175		)	(4,962		)	110			—		(7,027		)
Recoveries	61			—			—			—			—		61
Allowance for losses at December 31, 2015	$	41,839		$	1,282		$	3,939		$	11		$	465	$	47,536
Ending balance:
Individually evaluated for impairment	$	40,274		$	1,282		$	—		$	—		$	465	$	42,021
Collectively evaluated for impairment	$	1,565		$	—		$	3,939		$	11		$	—	$	5,515
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
Loans and Leases:
Ending balance:
Individually evaluated for impairment	$	169,707		$	1,544		$	—		$	—		$	1,396	$	172,647
Collectively evaluated for impairment	$	1,522,400		$	132,973		$	379,452		$	1,746		$	—	$	2,036,571
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—

32

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Credit quality indicators

Commercial Real Estate Loans

Loans are graded at inception and updates to assigned grades are made continually as new information is received. As a result, a loan previously rated 4 may, over time and with improved performance, be rated better than 4. Loans are graded on a scale of 1 to 4 with 1 representing the Company’s highest rating and 4 representing its lowest rating. Commercial real estate loans are first individually evaluated for impairment. To the extent no individual impairment is determined, a general reserve is established.

The characteristics of each rating category are as follows:

1. A loan with a rating of a 1 is considered to have satisfactory performance with no issues noted. All interest and principal payments are current and the probability of loss is remote;

2. A loan is graded with a rating of a 2 if a surveillance trigger event has occurred, but loss is not probable at this time. Such trigger events could include but are not limited to a trending decrease in occupancy rates or a flattening of lease revenues; and to a lesser extent, ground lease defaults, ground lease expirations that occur in the next six months or the borrower is delinquent on payment of property taxes or insurance.;

3. A loan with a rating of 3 has experienced an extended decline in operating performance, a significant deviation from its origination plan or the occurrence of one or more surveillance trigger events which create an increased risk for potential default. Loans identified in this category show some liquidity concerns. However, the risk of loss is not specifically assignable to any individual loan. The noted risk of the loans in this category is generally covered by general reserves;

4. A loan with a rating of a 4 is considered to be in payment default or default is expected, full recovery of the unpaid principal balance is improbable and loss is considered probable. The noted risk of the loans in this category is covered by specific reserves.

Credit risk profiles of commercial real estate loans were as follows (in thousands):

	Rating 1 (2)		Rating 2		Rating 3		Rating 4 (3)		Held for Sale		Total
As of September 30, 2016:
CRE whole loans	$	1,232,641	$	99,083	$	—	$	29,459	$	—	$	1,361,183
Mezzanine loans (1)	—		—		—		—		—		—
	$	1,232,641	$	99,083	$	—	$	29,459	$	—	$	1,361,183
As of December 31, 2015:
CRE whole loans	$	1,596,099	$	32,500	$	—	$	2,202	$	—	$	1,630,801
B notes	15,934		—		—		—		—		15,934
Mezzanine loans	7,300		—		—		38,072		—		45,372
	$	1,619,333	$	32,500	$	—	$	40,274	$	—	$	1,692,107

(1) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF 2006-1.

(2) Includes four loans which were impaired as of December 31, 2015.

(3) Includes three loans which were impaired as of September 30, 2016.

As part of the Company’s ongoing loan monitoring, third-party appraisal services were obtained on six legacy CRE loans during the quarter ended September 30, 2016. As a result of the evaluation of those appraisals, it was determined that two loans previously disclosed as impaired loans, one in Studio City, CA with an amortized cost of $27.5 million and the other in Tucson, AZ with an amortized cost of $2.0 million, had cost bases in excess of their appraised values. As such, for the three and nine months ended September 30, 2016, the Company recorded specific provisions of $6.1 million on the Studio City, CA loan and $2.0 million on the Tucson, AZ loan. Previously, the Studio City, CA loan was under contract for sale at a value in excess of the Company's loan amount. The contract for sale was terminated in October 2016. The Tucson, AZ loan was previously supported by a broker’s opinion of value received as of December 31, 2015. The updated appraisal, after factoring in modified terms with

33

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

the operating manager, and adjustments to projected occupancy and the average daily rate, returned a fair value below our cost basis, resulting in the full impairment of the portion of this whole loan held directly on balance sheet. A portion of this whole loan is also held in RREF CDO 2007-1. The provisions recorded against these loans reflect the estimated recoverable value. These and other assets in the loan pool continue to be monitored consistent with the Company’s impairment evaluation process.

The Company also had six loans classified as rating 2 due to surveillance triggers being registered. Of the six loans, several will be classified as loans held for sale as of December 31, 2016 (see Note 24). The other two loans had surveillance trigger events due to a mechanics lien and a code violation. These two loans were not considered impaired as of September 30, 2016.

All of the Company's commercial real estate loans were current with exception of one mezzanine loan that had defaulted as of September 30, 2016 and December 31, 2015. This loan was deconsolidated as part of the Company's adoption of amendments to consolidation accounting guidance as required on January 1, 2016 (see Note 2). However, as a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, par value of $28.8 million of this mezzanine loan was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero at September 30, 2016.

Bank Loans

Loans are graded at inception and updates to assigned grades are made continually as new information is received. Loans are graded on a scale of 1 to 5 with 1 representing the Company’s highest rating and 5 representing its lowest rating. Bank loans are first individually evaluated for impairment. To the extent no individual impairment is determined, a general reserve is established.

The characteristics of each rating category are as follows:

1. Loans with a rating of 1 are considered performing within expectations. All interest and principal payments are current, all future payments are anticipated and loss is not probable;

2. Loans with a rating of a 2 are considered to have limited liquidity concerns and are watched closely. Loans identified in this category show remote signs of liquidity concerns, loss is not probable and therefore no reserve is established;

3. Loans with a rating of a 3 are considered to have possible future liquidity concerns. Loans identified in this category show some liquidity concerns, but the ability to estimate potential defaults is not quantifiable and therefore no reserve is established;

4. Loans with a rating of a 4 are considered to have nearer term liquidity concerns. These loans have a reasonable possibility of future default. However, the risk of loss is not assignable to one specific credit. The noted risk of the loans in this category is covered by general reserves; and

5. Loans with a rating of a 5 have defaulted in payment of principal and interest or default is imminent. It is probable that impairment has occurred on these loans based on their payment status and that impairment is estimable. The noted risk of the loans in this category is covered by specific reserves.

Credit risk profiles of bank loans were as follows (in thousands):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Held for Sale		Total
As of December 31, 2015:
Bank loans	$	113,897	$	17,578	$	1,498	$	—	$	1,544	$	1,475	$	135,992

As of September 30, 2016 all of the Company's bank loans were deconsolidated (see Note 2). As of December 31, 2015, all of the Company's bank loans were current with respect to debt service with the exception of one loan with an amortized aggregate cost of $1.5 million, on which there was a reserve.

Middle Market Loans

At inception, all middle market loans are graded at a 2. Updates to assigned grades are made continually as new information is received. Loans are graded on a scale of 1 to 5 with 1 representing the Company’s highest rating and 5 representing its lowest rating. Middle market loans are only evaluated individually for impairment.

34

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The characteristics of each rating category are as follows:

1. A loan with a rating of a 1 is considered performing above expectations and the likelihood of loss is remote;

2. A loan with a rating of a 2 is considered performing within expectations and the likelihood of loss is remote;

3. A loan with a rating of a 3 is considered performing below expectations and requires close monitoring but no loss of interest or principal is expected. Loans receiving this rating may be out of compliance with financial covenants; however, these loans are current with respect to interest and principal;

4. A loan with a rating of a 4 is considered performing below expectations and some loss of interest or dividend is expected but no loss of principal. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due, but generally not more than 180 days past due; and

5. A loan with a rating of a 5 is considered performing substantially below expectations, in default and some loss of principal is expected. The borrower is out of compliance with most or all of the debt covenants and payments are substantially delinquent.

Credit risk profiles of middle market loans were as follows (in thousands):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Held for Sale		Total
As of September 30, 2016:
Middle market loans	$	—	$	40,048	$	11,491	$	—	$	—	$	7,182	$	58,721
As of December 31, 2015:
Middle market loans	$	44,252	$	305,578	$	29,622	$	—	$	—	$	—	$	379,452

As of September 30, 2016, the Company's syndicated loans were all performing and one remaining directly originated loan classified as held for sale was in default. The Company recorded an additional unrealized loss on this loan of $9.6 million, included in the net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives line item on the consolidated statement of operations, representing the lower of the loan's cost or fair value based on an updated third party valuation at September 30, 2016. The rest of the Company's portfolio is current with respect to debt service.  All of the Company’s middle market loans were current with respect to debt service as of December 31, 2015.

Residential Mortgage Loans

Residential mortgage loans are reviewed periodically for collectability in light of historical experience, the nature and amount of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral, and prevailing underlying conditions.

Direct Financing Leases

During the year ended December 31, 2015, the Company recorded a provision against the value of the direct financing leases in the amount of $465,000. As of September 30, 2016, the Company held $571,000 of direct financing leases, net of reserves.

35

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Loan Portfolios Aging Analysis

The following table presents the loan and lease portfolio aging analysis as of the dates indicated at amortized cost (in thousands):

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
As of September 30, 2016:
CRE whole loans	$	—	$	—	$	—	$	—	$	1,361,183	$	1,361,183	$	—
Mezzanine loans (3)	—		—		—		—		—		—		—
Middle market loans (4)	—		4,625		—		4,625		54,096		58,721		—
Direct Financing Leases	5		—		—		5		1,031		1,036		—
Residential mortgage loans (1)	—		—		129		129		193,597		193,726		—
Total loans	$	5	$	4,625	$	129	$	4,759	$	1,609,907	$	1,614,666	$	—
As of December 31, 2015:
CRE whole loans (2)	$	—	$	—	$	—	$	—	$	1,630,801	$	1,630,801	$	—
B notes	—		—		—		—		15,934		15,934		—
Mezzanine loans	—		38,072		—		38,072		7,300		45,372		—
Bank loans	1,544		—		—		1,544		132,973		134,517		—
Middle market loans	—		—		—		—		379,452		379,452		—
Direct Financing Leases	12		214		—		226		1,170		1,396		—
Residential mortgage loans (1)	27		41		80		148		96,069		96,217		—
Total loans	$	1,583	$	38,327	$	80	$	39,990	$	2,263,699	$	2,303,689	$	—

(1) Contains $190.4 million and $94.5 million of residential mortgage loans held for sale at fair value at September 30, 2016 and December 31, 2015, respectively.

(2) Current loans include one impaired whole loan with an amortized cost of $2.2 million, which was fully reserved as of December 31, 2015.

(3) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF 2006-1.

(4) Contains one middle market loan held for sale at fair value of $4.6 million at September 30, 2016.

36

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Impaired Loans

The following tables show impaired loans as of the dates indicated (in thousands):

	Recorded Balance (1)		Unpaid Principal Balance		Specific Allowance			Average Investment in Impaired Loans		Interest Income Recognized
As of September 30, 2016:
Loans without a specific valuation allowance:
CRE whole loans	$	8,674	$	8,674	$	—		$	8,674	$	434
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Loans with a specific valuation allowance:
CRE whole loans	$	29,459	$	29,459	$	(8,059	)	$	29,459	$	65
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Bank loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Total:
CRE whole loans	$	38,133	$	38,133	$	(8,059	)	$	38,133	$	499
Mezzanine loans	—		—		—			—		—
Middle market loans	—		—		—			—		—
Residential mortgage loans	—		—		—			—		—
	$	38,133	$	38,133	$	(8,059	)	$	38,133	$	499
As of December 31, 2015:
Loans without a specific valuation allowance:
CRE whole loans	$	129,433	$	129,433	$	—		$	128,591	$	3,939
B notes	$	—	$	—	$	—		$	—	$	—
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Bank loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Loans with a specific valuation allowance:
CRE whole loans	$	2,202	$	2,202	$	(2,202	)	$	2,202	$	63
B notes	$	—	$	—	$	—		$	—	$	—
Mezzanine loans	$	38,072	$	38,072	$	(38,072	)	$	38,072	$	(2,879	)
Bank loans	$	1,544	$	1,551	$	(1,282	)	$	1,544	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Total:
CRE whole loans	$	131,635	$	131,635	$	(2,202	)	$	130,793	$	4,002
B notes	—		—		—			—		—
Mezzanine loans	38,072		38,072		(38,072		)	38,072		(2,879		)
Bank loans	1,544		1,551		(1,282		)	1,544		—
Middle market loans	—		—		—			—		—
Residential mortgage loans	—		—		—			—		—
	$	171,251	$	171,258	$	(41,556	)	$	170,409	$	1,123

(1) As a result of the adoption of new consolidation accounting guidance as required on January 1, 2016, the Company deconsolidated $91.3 million of senior participations in four loans that were previously classified as impaired loans in the Company's consolidated financial statements as of December 31, 2015 (see Note 2).

37

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Troubled-Debt Restructurings

The following tables show troubled-debt restructurings in the Company's loan portfolio (in thousands):

	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Nine Months Ended September 30, 2016
CRE whole loans	3	$	29,459	$	21,400
Mezzanine loans	—	—		—
Middle market loans	—	—		—
Residential mortgage loans	—	—		—
Total loans	3	$	29,459	$	21,400
	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Nine Months Ended September 30, 2015
CRE whole loans	3	$	99,959	$	99,959
B notes	—	—		—
Mezzanine loans	1	38,072		—
Bank loans	—	—		—
Middle market loans	—	—		—
Residential mortgage loans	—	—		—
Total loans	4	$	138,031	$	99,959

As of September 30, 2016 and 2015, there were no commercial real estate loan troubled-debt restructurings that subsequently defaulted.

NOTE 10 - BUSINESS COMBINATIONS

On February 26, 2014, the Company made an additional capital contribution to LCF which gave the Company majority ownership at 50.2%. As a result, the Company began consolidating the LCF joint venture. The joint venture was established for the purpose of acquiring life settlement contracts through a financing facility. On April 30, 2015, the Company committed to another capital contribution in the amount of $750,000, increasing its ownership of LCF to 60.7%. The first installment of $375,000 was funded on April 30, 2015 and the second installment of $375,000 was funded on July 30, 2015. On December 15, 2015, the Company committed to an additional capital contribution in the amount of $1.3 million, increasing its ownership of LCF to 70.9%. The first installment of $750,000 was funded on January 5, 2016 and the second installment of $500,000 was funded on June 30, 2016.

The Company engaged a third party expert to assist in determining the fair values of the assets and liabilities assumed on this investment. Based on the final valuation, which determined an enterprise value of LCF of approximately $4.1 million, and in accordance with guidance on business combinations, the Company confirmed that no further adjustments were necessary.

38

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 11 - INTANGIBLE ASSETS

The following table summarizes the activity of intangible assets for the period indicated (in thousands):

	Management Contracts			Wholesale/Correspondent Relationships		Mortgage Servicing Rights			Total
Balance, January 1, 2016	$	5,316		$	90	$	20,822		$	26,228
Additions	—			—		13,815			13,815
Sales	—			—		—			—
Amortization	(1,133		)	—		(3,753		)	(4,886		)
Total before impairment adjustment	4,183			90		30,884			35,157
Temporary impairment adjustment	—			—		(5,600		)	(5,600		)
Other than temporary impairment adjustment	(3,671		)	—		—			(3,671		)
Balance, September 30, 2016	$	512		$	90	$	25,284		$	25,886

Management Contracts and Wholesale/Correspondent Relationships

The Company recognized fee income on management contracts of $553,000 and $1.5 million for the three and nine months ended September 30, 2016, respectively, and $791,000 and $2.7 million for the three and nine months ended September 30, 2015, respectively.

For the three and nine months ended September 30, 2016 the Company recorded amortization expense of $331,000 and $1.1 million, respectively, related to the Company's management contracts. For the three and nine months ended September 30, 2015 the Company recorded amortization expense of $518,000 and $1.5 million related to the Company's management contracts and wholesale/correspondent relationships, respectively. In October 2016, one of the two remaining CLOs associated with the management contracts was called, and the anticipated call date of the other CLO was determined to be early 2017. In accordance with guidance on intangible assets other than goodwill, the Company tested its two remaining management contracts for impairment at September 30, 2016. The carrying amounts of the management contracts were deemed to be unrecoverable and in excess of their fair values, calculated using a discounted cash flow analysis. As a result, an impairment loss of $3.7 million was recognized for the three months ended September 30, 2016 and recorded on the Company’s consolidated statement of operations. The Company expects to record amortization expense on its management contracts of $299,000 for the three months ending December 31, 2016. The Company expects to record amortization expense on its management contracts of $213,000 for the year ending December 31, 2017, and no amortization expense of its management contracts in 2018, 2019 or 2020. The weighted average amortization period was 0.7 years and 5.8 years at September 30, 2016 and December 31, 2015, respectively.

Mortgage Servicing Rights

Through the Company's wholly-owned residential mortgage loan originator PCM, residential mortgage loans are sold through one of the following methods: (i) sales to or pursuant to programs sponsored by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association, or (ii) sales to private investors. The Company may have continuing involvement in mortgage loans sold by retaining servicing rights and servicing obligations.

The total servicing portfolio consists of loans associated with capitalized mortgage servicing rights (“MSRs”) and loans held for sale.  In accordance with guidance on servicing assets and liabilities, the Company utilizes the amortization method for the subsequent measurement of its MSRs. The total servicing portfolio was $3.0 billion and $2.0 billion as of September 30, 2016 and December 31, 2015, respectively.  MSRs recorded in the Company's consolidated balance sheets are related to the capitalized servicing portfolio and are created through the sale of originated residential mortgage loans. Amounts related to capitalized MSRs are recorded in the gain (loss) on sale of residential mortgage loans line item in the Company's statement of operations. Amounts related to temporary impairment adjustments are recorded in fee income in the Company's statement of operations.

For the three and nine months ended September 30, 2016, the Company recognized $1.5 million and $3.8 million of amortization expense related to MSRs, respectively. For the three and nine months ended September 30, 2015, the Company recognized $1.3 million and $3.1 million, respectively. The Company expects to recognize amortization related to its MSRs

39

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

portfolio in the amount of $1.6 million for the three months ending December 31, 2016, $5.5 million for the year ending December 31, 2017, $4.4 million for the year ending December 31, 2018, $3.5 million for the year ending December 31, 2019, and $2.9 million for the year ending December 31, 2020. The weighted average amortization period was 5.1 years and 6.7 years at September 30, 2016 and December 31, 2015, respectively.

The Company also records MSRs at fair value on a non-recurring basis. MSRs are recorded at fair value at inception and at the end of each reporting period if the fair value is less than unamortized cost. The Company uses a discounted cash flow approach to estimate the fair value of MSRs utilizing the valuation services of an independent third party. The key assumptions used in the estimation of the fair value of MSRs include prepayment speeds, discount rates, default rates, cost to service, contractual servicing fees and escrow earnings. During the three months ended September 30, 2016 the Company recorded temporary impairment of $800,000 increasing the impairment for the nine months endedSeptember 30, 2016 to $5.6 million. The fair value of MSRs was $25.3 million and $21.3 million at September 30, 2016 and December 31, 2015, respectively.

The activity in the loan servicing portfolio associated with capitalized servicing rights consisted of the following (in thousands):

	September 30, 2016			December 31, 2015
Balance, beginning of period	$	1,998,273		$	894,767
Additions	1,288,392			1,236,145
Payoffs, sales and curtailments	(294,899		)	(132,639		)
Balance, end of period	$	2,991,766		$	1,998,273

The value of MSRs is driven by the net positive, or in some cases net negative, cash flows associated with servicing activities.  These cash flows include contractually specified servicing fees, late fees and other ancillary servicing revenue and were recorded within fee income as follows (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Servicing fees from capitalized portfolio	$	1,794	$	1,071	$	4,786	$	2,533
Late fees	$	58	$	37	$	157	$	78
Other ancillary servicing revenue	$	12	$	2	$	24	$	9

40

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 12 - BORROWINGS

The Company historically has financed the acquisition of its investments, including investment securities and loans, through the use of secured and unsecured borrowings in the form of securitized notes, repurchase agreements, secured term facilities, warehouse facilities, convertible senior notes, senior secured revolving credit agreements and trust preferred securities issuances.  Certain information with respect to the Company’s borrowings is summarized in the following table (in thousands, except percentages):

	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings		Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
As of September 30, 2016:
RCC CRE Notes 2013 Senior Notes	$	16,315	$	136	$	16,179	3.96%	12.2 years	$	63,199
RCC 2014-CRE2 Senior Notes	137,936		2,079		135,857		1.99%	15.6 years	255,062
RCC 2015-CRE3 Senior Notes	206,113		2,630		203,483		2.61%	15.5 years	260,058
RCC 2015-CRE4 Senior Notes	175,987		2,534		173,453		2.33%	15.9 years	262,579
Unsecured Junior Subordinated Debentures	51,548		—		51,548		4.64%	20.1 years	—
6.0% Convertible Senior Notes	115,000		3,654		111,346		6.00%	2.2 years	—
8.0% Convertible Senior Notes	100,000		3,758		96,242		8.00%	3.3 years	—
CRE - Term Repurchase Facilities (2)	338,070		3,101		334,969		2.86%	1.9 years	491,760
CMBS - Term Repurchase Facilities (3)	77,811		29		77,782		2.67%	210 days	113,531
Trust Certificate - Term Repurchase Facility (4)	26,661		320		26,341		6.03%	2.1 years	89,181
Residential Mortgage Financing Agreements (5)	174,642		—		174,642		3.35%	63 days	247,794
Total	$	1,420,083	$	18,241	$	1,401,842	3.48%	7.5 years	$	1,783,164

	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings		Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
As of December 31, 2015:
RREF CDO 2006-1 Senior Notes (1)	$	52,772	$	—	$	52,772	2.60%	30.6 years	$	94,379
RREF CDO 2007-1 Senior Notes (1)	91,752		—		91,752		1.65%	30.8 years	210,904
RCC CRE Notes 2013 Senior Notes	58,465		664		57,801		3.21%	13.0 years	104,439
RCC 2014-CRE2 Senior Notes	198,594		2,991		195,603		1.68%	16.3 years	313,663
RCC 2015-CRE3 Senior Notes	282,127		3,466		278,661		2.25%	16.2 years	341,099
RCC 2015-CRE4 Senior Notes	223,735		3,160		220,575		2.06%	16.6 years	308,042
Apidos Cinco CDO Senior Notes (1)	135,417		—		135,417		1.25%	4.4 years	154,584
Unsecured Junior Subordinated Debentures	51,548		135		51,413		4.40%	20.8 years	—
6.0% Convertible Senior Notes	115,000		4,917		110,083		6.00%	2.9 years	—
8.0% Convertible Senior Notes	100,000		4,599		95,401		8.00%	4.0 years	—
CRE - Term Repurchase Facilities (2)	225,346		2,418		222,928		2.64%	1.6 years	321,267
CMBS - Term Repurchase Facility (3)	25,658		2		25,656		1.57%	1.1 years	31,650
Trust Certificates - Term Repurchase Facility (4)	26,659		415		26,244		5.85%	2.9 years	89,181
Residential Investments - Term Repurchase Facility (5)	782		—		782		2.75%	264 days	835
Residential Mortgage Financing Agreements (6)	85,819		—		85,819		3.10%	257 days	120,952
CMBS - Short Term Repurchase Agreements (7)	57,407		—		57,407		2.06%	18 days	79,347
Senior Secured Revolving Credit Agreement (8)	190,000		3,026		186,974		3.09%	3.2 years	376,306
Total	$	1,921,081	$	25,793	$	1,895,288	2.89%	10.6 years	$	2,546,648

(1) On January 1, 2016, RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO were deconsolidated in accordance with guidance on consolidation (see Note 2).

(2) Amounts also include accrued interest expense of $410,000 and $315,000 related to CRE repurchase facilities as of September 30, 2016 and December 31, 2015, respectively.

(3) Amounts also include accrued interest expense of $136,000 and $18,000 related to CMBS repurchase facilities as of September 30, 2016 and December 31, 2015, respectively. Amounts do not reflect CMBS repurchase agreement borrowings that are components of linked transactions as of December 31, 2015.

41

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

(4) Amounts also include accrued interest expense of $62,000 and $61,000 related to trust certificate repurchase facilities as of September 30, 2016andDecember 31, 2015, respectively.

(5) Amounts also include accrued interest expense of $0 and $30,000 related to residential investment facilities as of September 30, 2016 and December 31, 2015, respectively.

(6) The value of collateral related to residential mortgage financing agreements is the appraised value of the collateral underlying the residential mortgage loans subject to repurchase as of September 30, 2016 and December 31, 2015.

(7) Amounts also include accrued interest expense of $0 and $40,000 related to CMBS short term repurchase facilities as of September 30, 2016 and December 31, 2015.

(8) The Company sold its interest in Northport TRS, LLC and the Senior Secured Revolving Credit Agreement was assumed by the purchaser. See Note 4 and Note 7 for further details.

The Company obtained three waivers of certain covenants for its CRE repurchase facilities and Wells Fargo Bank, NA ("Wells Fargo") CMBS repurchase facility as of September 30, 2016. The Company is in compliance with all other covenants in the respective agreements as of September 30, 2016.

Securitizations

The following table sets forth certain information with respect to the Company's consolidated securitizations:

Securitization	Closing Date	Maturity Date	End of Designated Principal Reinvestment Period (1)	Total Note Paydowns as of September 30, 2016
				(in millions)
RCC CRE Notes 2013	December 2013	December 2028	N/A	$	244.5
RCC 2014-CRE2	July 2014	April 2032	July 2016	$	97.4
RCC 2015-CRE3	February 2015	March 2032	February 2017	$	76.0
RCC 2015-CRE4	August 2015	August 2032	August 2017	$	47.7

(1) The designated principal reinvestment period is the period where principal payments received by each respective securitization may be designated by the Company to purchase funding participations of existing collateral originally underwritten at the close of each securitization, which was funded outside of the deal structure.

The investments held by the Company's securitizations collateralize the securitization's borrowings and, as a result, are not available to the Company, its creditors, or stockholders. All senior notes retained at closing or subsequently repurchased by the Company as of September 30, 2016 eliminate in consolidation.

On January 1, 2016, the Company adopted the amendments to the consolidation guidance (see Note 2). As a result of its evaluation, the Company deconsolidated RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO.

42

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Repurchase and Credit Facilities

Borrowings under the Company's repurchase agreements were guaranteed by the Company or one of its subsidiaries. The following table sets forth certain information with respect to the Company's borrowings (in thousands, except percentages):

	As of September 30, 2016						As of December 31, 2015
	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral	Weighted Average Interest Rate	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral	Weighted Average Interest Rate
CMBS Term Repurchase Facilities
Wells Fargo Bank (1)	$	18,608	$	24,008	15	1.82%	$	25,656	$	31,650	21	1.57%
Deutsche Bank (2)	59,174		89,523		20	2.93%	—		—		—	—%
CRE Term Repurchase Facilities
Wells Fargo Bank (3)	194,903		286,199		14	2.66%	123,937		179,169		9	2.39%
Morgan Stanley Bank (4)	140,066		205,561		12	3.15%	98,991		142,098		7	2.96%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015 (5)	26,341		89,181		1	6.03%	26,244		89,181		1	5.85%
Short-Term Repurchase Agreements - CMBS
Wells Fargo Securities, LLC	—		—		—	—%	13,548		19,829		3	1.93%
Deutsche Bank Securities, LLC	—		—		—	—%	43,859		59,518		17	2.10%
Residential Investments Term Repurchase Facility
Wells Fargo Bank	—		—		—	—%	782		835		1	2.75%
Residential Mortgage Financing Agreements
New Century Bank	37,775		48,359		163	3.50%	43,789		61,111		199	3.17%
Wells Fargo Bank	136,867		199,436		457	3.31%	42,030		59,841		166	3.03%
Totals	$	613,734	$	942,267			$	418,836	$	643,232

(1) The Wells Fargo Bank CMBS term repurchase facility includes $3,000 and $2,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(2) The Deutsche Bank CMBS term repurchase facility includes $26,000 and $0 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(3) The Wells Fargo Bank CRE term repurchase facility includes $1.8 million and $675,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(4) The Morgan Stanley Bank CRE term repurchase facility includes $1.3 million and $1.7 million of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(5) The RSO Repo SPE Trust 2015 term repurchase facility includes $320,000 and $415,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

43

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The following table shows information about the amount at risk under the repurchase facilities (dollars in thousands):

	Amount at Risk (1)		Weighted Average Maturity	Weighted Average Interest Rate
As of September 30, 2016:
CMBS Term Repurchase Facilities
Wells Fargo Bank, National Association	$	5,420	123 days	1.82%
Deutsche Bank AG	$	30,672	237 days	2.93%
CRE Term Repurchase Facilities
Wells Fargo Bank, National Association	$	90,393	1.8 years	2.66%
Morgan Stanley Bank, National Association	$	65,065	1.9 years	3.15%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015	$	62,575	2.1 years	6.03%
Residential Mortgage Financing Agreements
New Century Bank	$	10,584	77 days	3.50%
Wells Fargo Bank, National Association	$	62,569	59 days	3.31%

As of December 31, 2015:
CMBS Term Repurchase Facility
Wells Fargo Bank, National Association	$	6,053	1.1 years	1.57%
CRE Term Repurchase Facilities
Wells Fargo Bank, National Association	$	54,674	240 days	2.39%
Morgan Stanley Bank, National Association	$	41,248	2.7 years	2.96%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015	$	62,575	2.9 years	5.85%
Short-Term Repurchase Agreements - CMBS
Wells Fargo Securities, LLC	$	6,288	11 days	1.93%
Deutsche Bank Securities, LLC	$	16,330	20 days	2.05%
Residential Investments Term Repurchase Facility
Wells Fargo Bank, National Association	$	54	264 days	2.75%
Residential Mortgage Financing Agreements
New Century Bank	$	17,322	124 days	3.17%
Wells Fargo Bank, National Association	$	17,811	134 days	3.03%

(1) Equal to the estimated fair value of securities or loans sold, plus accrued interest income, minus the sum of repurchase agreement liabilities plus accrued interest expense.

44

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

CRE - Term Repurchase Facilities

In February 2012, RCC Real Estate's wholly-owned subsidiary, RCC Real Estate SPE 4 LLC ("SPE 4"), entered into a master repurchase and securities agreement (the "2012 Facility") with Wells Fargo to finance the origination of commercial real estate loans. In July 2016, in exchange for applicable structuring and extension fees, the Company entered into a fifth amendment of the 2012 Facility which extended the current term to July 2018 with three additional one year extension options exercisable at the Company's option.

Residential Investments – Term Repurchase Facility

In June 2014, the Company's wholly-owned subsidiaries, RCC Resi Portfolio, RCC Resi TRS, and RCC Resi Depositor (the “Sellers”) entered into a master repurchase and securities contract (the “2014 Facility”) with Wells Fargo.  Under the 2014 Facility, from time to time, the parties may enter into transactions in which the Sellers transfer to Wells Fargo all of their right, title and interest to certain residential mortgage backed securities and other assets against the transfer of funds by Wells Fargo to the Sellers, with a simultaneous agreement by Wells Fargo to transfer back to the Sellers such assets at a date certain or on demand, against the transfer of funds from the Sellers to Wells Fargo. In July 2016, the Company elected to terminate the 2014 Facility.

Residential Mortgage Financing Agreements

In February 2011, PCM entered into a master repurchase agreement (the "New Century Facility") with New Century Bank d/b/a Customer's Bank ("New Century") to finance the acquisition of residential mortgage loans. In August 2016, PCM entered into a tenth amendment of the New Century Facility which extended the facility through December 2016 and reduced the maximum borrowing amount from $65.0 million to $50.0 million through October 2016 then to $35.0 million through November 2016 and finally to $25.0 million through December 2016. The New Century Facility's tenth amendment increases the interest margins following the October 2016 maximum amount reduction. New Century's compliance with purchase requests will no longer be required effective November 2016. No other material changes were made to the New Century Facility's terms.

In July 2014, PCM entered into a master repurchase agreement (the "Wells Fargo Facility") with Wells Fargo to finance the acquisition of residential mortgage loans. In May 2016, PCM amended its agreement with Wells Fargo to increase the maximum of the amount of the Wells Fargo Facility from $100.0 million to $115.0 million for the period from May 2016 to June 2016. In June 2016, PCM amended its agreement with Wells Fargo to increase the maximum of the amount of the Wells Fargo Facility from $115.0 million to $150.0 million. In August 2016, PCM entered into a seventh amendment of the Wells Fargo Facility to extend the facility to November 2016. No other material changes were made to the Wells Fargo Facility's terms.

Contractual maturity dates of the Company's borrowings by category and year are presented in the table below (in thousands):

	Total		2016		2017		2018		2019		2020 and Thereafter
CRE Securitizations(1)	$	528,972	$	—	$	—	$	—	$	—	$	528,972
Repurchase Agreements	613,734		174,642		77,782		361,310		—		—
Unsecured Junior Subordinated Debentures	51,548		—		—		—		—		51,548
6.0 % Convertible Notes	111,346		—		—		111,346		—		—
8.0 % Convertible Notes	96,242		—		—		—		—		96,242
Total	$	1,401,842	$	174,642	$	77,782	$	472,656	$	—	$	676,762

(1) At September 30, 2016, RCC CRE Notes 2013's balance of principal paydown receivables relating to its underlying loan portfolio totaled $36.6 million, the entirety of which it received in cash during October 2016. The Company paid down the remaining $16.2 million RCC CRE Notes 2013 borrowings outstanding during October 2016.

45

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 13 - SHARE ISSUANCE AND REPURCHASE

	For the Nine Months Ended   September 30, 2016			Total Outstanding
	Number of Shares Repurchased	Weighted Average Purchase Price		Number of Shares	Weighted Average Offering Price
8.50% Series A Preferred Stock	—	$	—	1,069,016	$	24.29
8.25% Series B Preferred Stock	195,900	$	15.80	5,544,579	$	24.02
8.625% Series C Preferred Stock	—	$	—	4,800,000	$	25.00

On or after June 14, 2017 the Company may, at its option, redeem its Series A preferred stock, in whole or part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

On or after October 2, 2017 the Company may, at its option, redeem its Series B preferred stock, in whole or part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

On or after July 30, 2024, the Company may, at its option, redeem its Series C preferred stock, in whole or part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

Under a dividend reinvestment plan authorized by the board of directors on March 21, 2013, the Company is authorized to issue up to 5,000,000 shares of common stock. During the three and nine months ended September 30, 2016, the Company sold approximately 3,000 and 9,000 shares of common stock through this program, resulting in proceeds of approximately $40,000 and $110,000, respectively.

Under a share repurchase plan authorized by the board of directors on August 3, 2015, the Company is authorized to repurchase up to $50.0 million of its outstanding equity and debt securities. During the nine months ended September 30, 2016, the Company repurchased $9.2 million of its common stock, representing approximately 800,000 shares. Since the inception of the program through September 30, 2016, the Company has repurchased $35.2 million of its common stock, representing approximately 2.8 million shares or 8.3% of the outstanding balance. During the nine months ended September 30, 2016, the Company repurchased $3.1 million of its outstanding Series B preferred stock, representing approximately 196,000 shares or 3.4% of the initial outstanding balance. In March 2016, the Company's board of directors approved a new securities repurchase program for up to $50.0 million of its outstanding securities, which replaced the August 2015 repurchase plan.

NOTE 14 - SHARE-BASED COMPENSATION

The following table summarizes the Company's restricted common stock transactions:

	Non-Employee Directors (1)		Non-Employees		Employees		Total
Unvested shares as of January 1, 2016	15,267		617,657		58,445		691,369
Issued	25,948		230,338		50,784		307,070
Vested	(13,895	)	(469,074	)	(18,452	)	(501,421	)
Forfeited	—		(262	)	—		(262	)
Unvested shares as of September 30, 2016	27,320		378,659		90,777		496,756

(1) Non-employees are employees of Resource America.

The Company is required to value any unvested shares of restricted common stock granted to non-employees at the current market price.  The estimated fair value at grant date of the unvested shares of restricted common stock granted to non-employees during the nine months ended September 30, 2016 and 2015 was $2.3 million and $4.9 million, respectively. The estimated fair value at grant date of unvested shares of restricted common stock issued to the Company’s eight non-employee directors during the nine months ended September 30, 2016 and 2015 was $290,000 and $256,000, respectively. The estimated fair value of the unvested shares of restricted common stock granted during the nine months ended September 30, 2016 and 2015, including the grant date fair value of shares issued to the Company’s employees, was $483,000 and $737,000, respectively.

46

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The Company records any unvested shares of restricted common stock granted to non-employee directors at the fair value on the grant date amortized over the service period.  The amortization recognized during the three and nine months ended September 30, 2016 and 2015 was $64,000 and $192,000 and $64,000 and $193,000, respectively.

As of September 30, 2016, the total unrecognized restricted common stock expense for non-employees was $2.2 million, with a weighted average amortization period remaining of 2.0 years.

The following table summarizes restricted common stock grants during the nine months ended September 30, 2016:

Date	Shares	Vesting/Year	Date(s)
January 21, 2016	130,903	33.3%	1/21/17, 1/21/18, 1/21/19
January 21, 2016	50,784	33.3%	1/21/17, 1/21/18, 1/21/19
February 1, 2016	3,421	100%	2/1/17
February 5, 2016	90,595	33.3%	2/5/17, 2/5/18, 2/5/19
March 8, 2016	13,912	100%	3/8/17
March 14, 2016	3,158	100%	3/14/17
March 31, 2016	8,840	100%	5/15/17(1)
June 6, 2016	2,702	100%	6/6/17
September 29, 2016	2,755	100%	9/29/17

(1) In connection with a grant of restricted common stock made on September 24, 2014, the Company agreed to issue up to 17,682 shares of common stock if certain loan origination performance thresholds were achieved by personnel from the Company’s loan origination team.  The performance criteria were measured at the end of two annual measurement periods which began April 1, 2014.  The agreement also provided dividend equivalent rights pursuant to which the dividends that would have been paid on the shares had they been issued on the date of grant were paid at the end of each annual measurement period if the performance criteria were met.  If the performance criteria were not met, the accrued dividends would be forfeited.  As a consequence, the Company did not record the dividend equivalent rights until earned.  On March 31, 2016, the final measurement period ended and 8,840 shares were earned. Approximately $42,000 of accrued dividend equivalent rights were paid in April 2016. These shares will vest over the subsequent 12 months at a rate of one-fourth per quarter.

The following table summarizes the status of the Company’s vested stock options as of September 30, 2016:

Vested Options	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Vested as of January 1, 2016	26,250	$	46.60
Vested	—	—
Exercised	—	—
Forfeited	—	—
Expired	—	—
Vested as of September 30, 2016	26,250	$	46.60	2.20	$	—

There were no options granted during the nine months endedSeptember 30, 2016 or 2015. The outstanding stock options have a contractual term of ten years, and will expire in May 2021.

The components of equity compensation expense for the periods presented is as follows (in thousands):

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2016		2015			2016		2015
Restricted shares granted to non-employees (1) (2)	$	1,639	$	(466	)	$	3,352	$	840
Restricted shares granted to employees	63		177			900		528
Restricted shares granted to non-employee directors	64		64			192		193
Total equity compensation expense	$	1,766	$	(225	)	$	4,444	$	1,561

47

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

(1) Non-employees are employees of Resource America.

(2) Amounts include $896,000 of equity compensation expense, for the three and nine months ended September 30, 2016, associated with the accelerated stock vesting of former executives of the Company.

Under the Company's Management Agreement, incentive compensation is paid quarterly. Up to 75% of the incentive compensation is paid in cash and at least 25% is paid in the form of an award of common stock. There were no incentive fees paid to the Manager for the three and nine months ended September 30, 2016 and 2015.

Apart from incentive compensation payable under the Management Agreement, the Company has established no formal criteria for the issuance of equity awards as of September 30, 2016.  All awards are discretionary in nature and subject to approval by the compensation committee of the Company's board of directors.

On October 31, 2013, the Company, through its TRS, RCC Residential, completed a business combination whereby it acquired the assets of PCM, an Atlanta based company that originates and services residential mortgage loans, for approximately $7.6 million in cash. As part of this transaction, a key employee of PCM was granted approximately $800,000 of the Company’s restricted stock. In March 2016, this key employee ended his service period and all remaining amortization expense on unvested stock in the amount of $555,000 was accelerated. Any grants for employees of PCM are accounted for as compensation and amortized to equity compensation expense over the vesting period. Dividends declared on the stock while unvested are recorded as a general and administrative expense. Dividends declared after the stock vests are recorded as a distribution. For the three and nine months ended September 30, 2016, $63,000 and $900,000 of amortization of the stock grants was recorded to equity compensation expense, respectively. For the three and nine months ended September 30, 2015, $177,000 and $528,000 of amortization of the stock grants was recorded to equity compensation expense, respectively. For the three and nine months ended September 30, 2016, $38,000 and $115,000 of expense related to dividends on unvested shares was recorded to general and administrative expense on the Company’s consolidated statements of operations, respectively. For the three and nine months ended September 30, 2015, $50,000 and $136,000 of expense related to dividends on unvested shares was recorded to general and administrative expense on the Company’s consolidated statements of operations, respectively.

NOTE 15 - EARNINGS PER SHARE

On August 3, 2015, the Company's board of directors approved a one-for-four reverse stock split of its outstanding common stock which took effect after the close of business on August 31, 2015. Outstanding share and per-share amounts disclosed as of September 30, 2016 and for all other comparative periods provided have been retroactively adjusted to reflect the effects of the stock split.

The following table presents a reconciliation of basic and diluted earnings per share for the periods presented as follows (in thousands, except share and per share amounts):

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Basic:
Net income (loss) allocable to common shares	$	(51,573	)	$	6,778	$	(43,436	)	$	(14,831	)
Weighted average number of shares outstanding	30,528,368			32,515,226		30,513,131			32,726,194
Basic net income (loss) per share	$	(1.69	)	$	0.21	$	(1.42	)	$	(0.45	)
Diluted:
Net income (loss) allocable to common shares	$	(51,573	)	$	6,778	$	(43,436	)	$	(14,831	)
Weighted average number of shares outstanding	30,528,368			32,515,226		30,513,131			32,726,194
Additional shares due to assumed conversion of dilutive instruments	—			435,991		—			—
Adjusted weighted-average number of common shares outstanding	30,528,368			32,951,217		30,513,131			32,726,194
Diluted net income (loss) per share	$	(1.69	)	$	0.21	$	(1.42	)	$	(0.45	)

48

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Potentially dilutive shares consisting of 294,462 and 352,225 shares of restricted stock are not included in the calculation of diluted net income (loss) per share for the three and nine months ended September 30, 2016, respectively, because the effect was anti-dilutive. Potentially dilutive shares consisting of 9,002,864 shares issuable in connection with the potential conversion of the Company's 6.0% and 8.0% Convertible Senior Notes (see Note 12) for both the three and nine months ended September 30, 2016 were not included in the calculation of diluted net income (loss) per share because the effect would be anti-dilutive.

Potentially dilutive shares consisting of zero and 349,249 shares of restricted stock were not included in the calculation of diluted net (loss) per share for the three and nine months ended September 30, 2015, respectively, because the effect was anti-dilutive. Potentially dilutive shares consisting of 9,002,864 shares issuable in connection with the potential conversion of the Company's 6.0% and 8.0% Convertible Senior Notes for both the three and nine months ended September 30, 2015 were not included in the calculation of diluted net loss per share because the effect was anti-dilutive.

NOTE 16 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table presents the changes in each component of accumulated other comprehensive income (loss) for the nine months ended September 30, 2016 (dollars in thousands):

	Net unrealized (loss) gain on derivatives			Net unrealized (loss) gain on securities, available-for-sale			Foreign Currency Translation		Accumulated other comprehensive income (loss)
January 1, 2016 (as adjusted)	$	(131	)	$	(835	)	$	—	$	(966	)
Other comprehensive gain (loss) before reclassifications	118			8,382			—		8,500
Amounts reclassified from accumulated other comprehensive income	(29		)	(596		)	—		(625		)
September 30, 2016	$	(42	)	$	6,951		$	—	$	6,909

NOTE 17 - RELATED PARTY TRANSACTIONS

Relationship with Resource America and Certain of its Subsidiaries

Relationship with Resource America.  On September 19, 2013, the audit committee of the board of directors of Resource America concluded that Resource America should consolidate the financial statements of the Company, which was previously treated as an unconsolidated VIE. Resource America's audit committee reached this conclusion after consultations with the Office of the Chief Accountant of the Securities and Exchange Commission (the “Commission”) following comments received from the staff of the Division of Corporation Finance of the Commission and the audit committee's discussion with the Company's management and its independent registered public accounting firm. Resource America's audit committee noted that consolidation of the Company was not expected to materially affect Resource America's previously reported net income attributable to common shareholders. In December 2015, Resource America elected to early adopt consolidation guidance issued by the FASB in February 2015 (see Note 2) and as a result was required to reevaluate whether or not the Company should be consolidated into Resource America’s financial statements. It was determined that the Company is no longer a VIE and Resource America will no longer consolidate the Company’s financial statements. On September 8, 2016, Resource America was acquired by C-III, a leading commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, CDO management, principal investment, investment sales and multifamily property management. As part of the transaction, C-III took over control of the Company's Manager with respect to the management agreement (described below) from Resource America and became beneficial owner of 715,396 shares of the Company's common equity (2.3% of the Company's outstanding shares) held by Resource America as of September 30, 2016. On May 22, 2016, Resource America entered into a letter agreement with the Company pursuant to which the Company irrevocably waived its right to terminate the management agreement as a result of a “Change of Control” (as defined in the management agreement) resulting from the merger. At the close of the transaction on September 8, 2016, Resource America paid a $1.5 million fee to the Company for the waiver which was recorded in other income (expense) on the consolidated statements of operations.

The Company is managed by the Manager, which is a wholly-owned subsidiary of Resource America, pursuant to a management agreement that provides for both base and incentive management fees.  For the three and nine months ended September 30, 2016 the Manager earned base management fees of approximately $2.9 million and $9.8 million, respectively. For

49

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

the three and nine months ended September 30, 2015, the Manager earned base management fees of approximately $3.1 million and $9.8 million, respectively. No incentive management fees were earned for the three and nine months ended September 30, 2016 or 2015.  The Company also reimburses the Manager and Resource America for expenses, including the expenses of employees of Resource America who perform legal, accounting, due diligence and other services that outside professionals or consultants would otherwise perform, and for the wages, salaries and benefits of several Resource America personnel dedicated to the Company’s operations.  The Company also reimburses Resource America for additional costs incurred related to the Company's life care business, Long Term Care Conversion Funding, established for the purpose of originating and acquiring life settlement contracts. The initial agreement, authorized in December 2012, provided for an annual fee of $550,000, with a two-year term. In March 2015, the agreement was amended to extend the term for an additional two years terminating in December 2016. This fee is paid quarterly. For the three and nine months ended September 30, 2016 the Company paid the Manager $1.4 million and $4.0 million, respectively, as expense reimbursements. For the three and nine months ended September 30, 2015 the Company paid the Manager $1.3 million and $4.0 million, respectively, as expense reimbursements.

On November 24, 2010, the Company entered into an Investment Management Agreement with Resource Capital Markets, Inc. (“RCM”), a wholly-owned subsidiary of Resource America.  The initial agreement provided that: (a) RCM may invest up to $5.0 million of the Company’s funds, with the investable amount being adjusted by portfolio gains (losses) and collections, and offset by expenses, taxes and realized management fees, and (b) RCM can earn a management fee in any year that the net profits earned exceed a preferred return. On June 17, 2011, the Company entered into a revised Investment Management Agreement with RCM which provided an additional $8.0 million of the Company’s funds.  The management fee is 20% of the amount by which the net profits exceed the preferred return.  During the three and nine months ended September 30, 2016 and 2015, RCM earned no management fees. The portfolio began a partial liquidation during the year ended December 31, 2013 that has resulted in the outstanding portfolio balance being significantly decreased. The Company holds $3.7 million in fair market value of trading securities as of September 30, 2016, no change from $3.7 million at fair market value as of December 31, 2015.  The Company also reimburses RCM for expenses paid on the Company's behalf. For the three and nine months ended September 30, 2016, the Company paid RCM $1,000 and $9,000, respectively, as expense reimbursements. For the three and nine months ended September 30, 2015 the Company paid RCM $21,000 and $118,000, respectively, as expense reimbursements.

At September 30, 2016, the Company was indebted to the Manager for $1.5 million, comprised of base management fees of $948,000 and expense reimbursements of $600,000.  At December 31, 2015, the Company was indebted to the Manager for $2.5 million, comprised of base management fees of $978,000 and expense reimbursements of $1.6 million. At September 30, 2016, the Company was indebted to RCM under the Company’s Investment Management Agreement for $77,000, comprised entirely of expense reimbursements.  At December 31, 2015, the Company was indebted to RCM under the Company’s Investment Management Agreement for $152,000, comprised entirely of expense reimbursements. The Company's base management fee payable as well as expense reimbursements payable are recorded in accounts payable and other liabilities on the consolidated balance sheets.

During the year ended December 31, 2013, the Company, through one of its subsidiaries, Northport TRS, LLC, began originating middle-market loans. Resource America was paid origination fees in connection with the Company’s middle-market lending operations, which capped out at 2% of the loan balance for any loan originated. The Company was indebted to RCM for $0 and $93,000 as of September 30, 2016 and December 31, 2015, respectively, for the middle-market operations. As a result of its sale of Northport TRS, LLC, the Company has sold substantially all of its direct origination middle market loans and one syndicated loan, with an aggregate par balance of $257.3 million.

On November 7, 2013, the Company, through a wholly-owned subsidiary, purchased all of the membership interests in Elevation Home Loans, LLC, a start-up residential mortgage company, from a person who subsequently became an employee of Resource America for $830,000, paid in the form of 34,165 shares of restricted Company common stock.  The restricted stock vests in full on November 7, 2016, and includes dividend equivalent rights. Elevation Home Loans, LLC was liquidated in 2016.

In May 2016, the Company made an €12.5 million investment in Harvest CLO XV, a European CLO with a total par value of €413.0 million with an unrelated third-party collateral manager. In connection with this transaction, the Company paid a $2.3 million structuring and placement fee to Resource America.

50

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

As of September 30, 2016, the Company retained equity in eight securitizations, which were structured for the Company by the Manager.  Under the Management Agreement, the Manager was not separately compensated by the Company for executing these transactions and is not separately compensated for managing the securitizations' entities and their assets. The Company has liquidated two of these securitizations, one in October 2014 and another in June 2015. On January 1, 2016, the Company adopted new consolidation guidance on variable interest entities and, as a result, two of the Company's remaining securitizations were deconsolidated.

Relationship with LEAF Commercial Capital.LCC originated and managed equipment leases and notes on behalf of the Company. On March 5, 2010, the Company entered into agreements with Lease Equity Appreciation Fund II, L.P. (“LEAF II”) (an equipment leasing partnership sponsored by LEAF Financial and of which a LEAF Financial subsidiary is the general partner), pursuant to which the Company provided and funded an $8.0 million credit facility to LEAF II.  The credit facility initially had a one year term with interest at 12% per year, payable quarterly, and was secured by all the assets of LEAF II, including its entire ownership interest in LEAF II Receivables Funding.  The Company received a 1% origination fee in connection with establishing the facility.  The facility originally matured on March 3, 2011 and was extended until September 3, 2011 with a 1% extension fee paid on the outstanding loan balance.  On June 3, 2011, the Company entered into an amendment to extend the maturity to February 15, 2012 and to decrease the interest rate from 12% to 10% per annum resulting in a troubled-debt restructuring under current accounting guidance.  On February 15, 2012, the credit facility was further amended to extend the maturity to February 15, 2013 with a 1% extension fee accrued and added to the amount outstanding.  On January 11, 2013, the Company entered into another amendment to extend the maturity to February 15, 2014 with an additional 1% extension fee accrued and added to the amount outstanding. On December 17, 2013, the Company entered into another amendment to extend the maturity to February 15, 2015. At the end of 2014, the Company recorded a provision for loan loss on this loan of $1.3 million before extinguishing the loan and bringing direct financing leases in the amount of $2.1 million on the Company's books in lieu of the loan receivable. There was no provision taken during the three and nine months ended September 30, 2016. During the three and nine months ended September 30, 2015, the Company recorded a partial recovery of the previously taken provision in the amount $0 and $216,000, respectively. As of September 30, 2016, the Company held $571,000 of direct financing leases, net of reserves.

On November 16, 2011, the Company, together with LEAF Financial and LCC, entered into the SPA with Eos (see Note 3). The Company’s resulting interest is accounted for under the equity method.  For the three and nine months ended September 30, 2016 the Company recorded income of $415,000 and $2.8 million, respectively, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. For the three and nine months ended September 30, 2015 the Company recorded income of $961,000 and $1.4 million, respectively, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations.  The Company’s investment in LCC was $44.8 million and $42.0 million as of September 30, 2016 and December 31, 2015, respectively.

Relationship with CVC Credit Partners.On April 17, 2012, Apidos Capital Management (“ACM”), a former subsidiary of Resource America, was sold to CVC Credit Partners, L.P. ("CVC Credit Partners"), a joint venture entity in which Resource America owns a 24% interest. CVC Credit Partners manages internally and externally originated bank loan assets on the Company’s behalf.  Also, on February 24, 2011, a subsidiary of the Company purchased 100% of the ownership interests in Churchill Pacific Asset Management LLC ("CPAM") from Churchill Financial Holdings LLC for $22.5 million.  CPAM subsequently changed its name to RCAM. Through RCAM, the Company was initially entitled to collect senior, subordinated and incentive fees related to five CLOs holding approximately $1.9 billion in assets managed by RCAM.  RCAM is assisted by CVC Credit Partners in managing these CLOs.  CVC Credit Partners is entitled to 10% of all subordinated fees and 50% of the incentive fees received by RCAM.  For the three and nine months ended September 30, 2016 CVC Credit Partners earned subordinated and incentive fees of $254,000 and $561,000, respectively. For the three and nine months ended September 30, 2015 CVC Credit Partners earned subordinated and incentive fees of $173,000 and $631,000, respectively. In October 2012, the Company purchased 66.6% of the preferred equity in one of the RCAM CLOs. In May 2013, the Company purchased additional equity in this CLO, increasing its ownership percentage to 68.3%. In 2013 two of the five CLOs were called and the notes were paid down in full. In January 2016 another RCAM-managed CLO was called and $2.4 million of impairment, on a pre-tax basis, was recorded in depreciation and amortization on the Company's consolidated statements of operations on the related intangible asset as of December 31, 2015. In September 2016, another RCAM-managed CLO was called and $1.5 million of impairment, on a pre-tax basis, was recorded in impairment losses on the Company's consolidated statements of operations on the related intangible asset during the three months ended September, 30 2016. In September 2016, the Company recorded impairment on the remaining CLO of $2.2 million, on a pre-tax basis, on the related intangible asset for its anticipated redemption in early 2017.

51

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

In May, June and July 2013, the Company invested a total of $15.0 million in CVC Global Credit Opportunities Fund, L.P. which generally invests in assets through the Master Fund. The fund pays the investment manager a quarterly management fee in advance calculated at the rate of 1.5% annually based on the balance of each limited partner's capital account. The Company's management fee was waived upon entering the agreement because the Company is a related party of CVC Credit Partners. For the three and nine months ended September 30, 2015, the Company recorded a loss of $628,000 and earnings of $293,000, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. In March 2015, the Company elected to withdraw $5.0 million from the fund. In July 2015, a $625,000 withdrawal was requested and received. In October 2015, another $4.0 million withdrawal was requested and received. In December 2015, the Company elected to withdraw the remaining $8.6 million from the fund. The Company retained no investment in the fund as of December 31, 2015.

Relationship with Resource Real Estate.Resource Real Estate, a subsidiary of Resource America, originates, finances and manages the Company’s commercial real estate loan portfolio.  The Company reimburses Resource Real Estate for loan origination costs associated with all loans originated.  The Company had a receivable in the amount of $0 and $2,500 due from Resource Real Estate for loan origination costs in connection with the Company’s commercial real estate loan portfolio as of September 30, 2016 and December 31, 2015, respectively.

On December 1, 2009, the Company purchased a membership interest in RRE VIP Borrower, LLC (an unconsolidated VIE that held an interest in a real estate joint venture) from Resource America for $2.1 million, its book value.  RREM was asset manager of the venture and received a monthly asset management fee equal to 1.0% of the combined investment calculated as of the last calendar day of the month. There were no fees incurred for the three and nine months ended September 30, 2016 and 2015, as the last property associated with the joint venture was sold in July 2014. For the three and nine months ended September 30, 2016 the Company recorded income of $0 and $35,000, respectively, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. For the three and nine months ended September 30, 2015 the Company recorded income of $0 and $46,000, respectively, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. The income recorded in 2016 and 2015 was related to insurance premium refunds and the liquidation of bank accounts with respect to the underlying sold properties of the portfolio.

On January 15, 2010, the Company loaned $2.0 million to Resource Capital Partners, Inc. (“RCP”), a wholly-owned subsidiary of Resource America, so that it could acquire a 5.0% limited partnership interest in Resource Real Estate Opportunity Fund, L.P. (“RRE Opportunity Fund”).  RCP is the general partner of the RRE Opportunity Fund.  The loan was secured by RCP’s partnership interest in the RRE Opportunity Fund.  The promissory note bore interest at a fixed rate of 8.0% per annum on the unpaid principal balance.  In the event of default, interest accrued at a rate of 5.0% in excess of the fixed rate.  Interest was payable quarterly.  Mandatory principal payments were required to the extent distributable cash or other proceeds from RRE Opportunity Fund represent a return of RCP’s capital.  The loan had an original maturity date of January 14, 2015, with twoone-year extensions. RCP exercised the first option, extending the maturity to January 14, 2016. The loan was paid in full in April 2015.

The Company has closed the following four real estate securitization transactions, which provide financing for commercial real estate loans: RCC CRE Notes 2013, a $307.8 million securitization in December 2013; RCC 2014-CRE2, a $353.9 million securitization on July 30, 2014; RCC 2015-CRE3, a $346.2 million securitization on February 24, 2015; and RCC 2015-CRE4, a $312.9 million securitization on August 18, 2015. Resource Real Estate serves as special servicer for each transaction. With respect to each specialty service mortgage loan, Resource Real Estate receives an amount equal to the product of (a) the special servicing fee rate, 0.25% per annum, and (b) the outstanding principal balance of such specialty service mortgage loan. The servicing fee is payable monthly, on an asset-by-asset basis. The Company utilizes the brokerage services of Resource Securities, Inc. (“Resource Securities”), a wholly-owned broker-dealer subsidiary of Resource America, on a limited basis to conduct some of its asset trades. The Company paid Resource Securities placement agent fees in connection with each transaction as follows: $205,000, $175,000, $100,000, and $85,000, respectively.

In July 2014, the Company formed RCM Global Manager to invest in RCM Global, an entity formed to hold a portfolio of structured product securities. The Company contributed $15.0 million for a 63.8% membership interest in RCM Global. A five member board manages RCM Global, and all actions, including purchases and sales, must be approved by no less than three of the five members of the board. The portion of RCM Global that the Company does not own is presented as non-controlling interest as of September 30, 2015 and for the periods presented for the three and nine months ended September 30, 2015 in the Company's consolidated financial statement. All intercompany accounts and transactions have been eliminated in consolidation. In March and June 2015, the Company requested and received a proportional, in-kind distribution in certain securities held by RCM Global. The distribution of and subsequent sale of those securities by the Company through its subsidiary, RCC Residential,

52

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

resulted in the realization of $5.0 million of net gain for the year ended December 31, 2015. During the nine months ended September 30, 2016 RCC Residential received a cash distribution in the amount of $620,000. The Company's ownership interest was 28.6% as of September 30, 2016. On January 1, 2016, the Company adopted new consolidation guidance on variable interest entities and, as a result, the Company deconsolidated RCM Global and now accounts for this investment as an investment in unconsolidated entities on the consolidated balance sheet (see Note 2). For the three and nine months ended September 30, 2016, the Company recorded losses of $560,000 and $160,000 which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations, respectively.

In September 2014, the Company contributed $17.5 million to Pelium Capital for an initial ownership interest of 80.4%. Pelium Capital is a specialized credit opportunity fund managed by Resource America. The Company funded its final commitment of $2.5 million, as of February 1, 2015. The Company will receive 10% of the carried interest in the partnership for the first five years, and can increase its interest to 20% if the Company's capital contributions aggregate $40.0 million. Resource America contributed securities valued at $2.8 million to the formation of Pelium Capital. The portion of the fund that the Company does not own is presented as non-controlling interests as of the dates and for the periods presented in the Company's consolidated financial statements. Pelium Capital was determined not to be a VIE as there was sufficient equity at risk, the Company does not have disproportionate voting rights and Pelium Capital's partners have all of the following characteristics: (1) the power to direct the activities of Pelium; (2) the obligation to absorb losses; and (3) the right to receive residual returns. However, Pelium Capital was consolidated as a result of the Company's majority ownership and the Company's unilateral kick-out rights. The non-controlling interests in Pelium Capital are owned by Resource America and outside investors. All intercompany accounts and transactions were eliminated in consolidation as of December 31, 2015. The Company's ownership interest in Pelium Capital was 80.2% as of September 30, 2016. On January 1, 2016, the Company adopted new consolidation guidance on variable interest entities and, as a result, the Company deconsolidated Pelium Capital and now accounts for this investment as an investment in unconsolidated entities on the consolidated balance sheet (see Note 2). For the three and nine months ended September 30, 2016, the Company recorded earnings of $1.0 million and $2.8 million which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations, respectively.

On April 10, 2015, the Company entered into two first mortgage bridge loans in the amount of $2.5 million and $3.3 million with two funds sponsored by Resource America, Resource Real Estate Investors LP and Resource Real Estate Investors

II, LP. Each loan carried an interest rate of LIBOR plus 5.75% with a LIBOR floor of 0.25%. The loans had a maturity date of May 5, 2016, with two consecutive one-year options to extend upon the first maturity date. The loan in the amount of $2.5 million was repaid in full with interest on April 29, 2015. The second loan in the amount of $3.3 million was repaid in full with interest on July 31, 2015.

On June 24, 2015, the Company committed to invest up to $50.0 million in Pearlmark Mezz, a Delaware limited partnership. The contractual fund manager of the fund is Pearlmark Real Estate LLC ("Pearlmark"), a Delaware limited liability company that is 50% owned by Resource America. The Company will pay Pearlmark Mezz management fees of 1.0% on the unfunded committed capital and 1.5% on the invested capital. The Company is entitled to a management fee rebate of 25% for the first year of the fund. As of September 30, 2016, the Company is indebted for $268,000 for management fees, net of the rebate. Resource America has agreed that it will credit any such fees paid by the Company to Pearlmark against the base management fee that the Company pays to Resource America. The Company has invested an aggregate of $17.8 million in capital in Pearlmark Mezz. For the three and nine months ended September 30, 2016, the Company recorded earnings of $132,000 and $552,000 which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. As of September 30, 2016, the Company has an investment balance of $16.8 million and a 47.7% ownership interest in the fund.

Relationship with Law Firm.  Until 1996, Edward E. Cohen, a former director who was the Company’s Chairman from its inception until November 2009, was of counsel to Ledgewood, P.C. ("Ledgewood"), a law firm.  In addition, one of the Company’s former executive officers, Jeffrey F. Brotman, was employed by Ledgewood until 2007.  Mr. E. Cohen receives certain debt service payments from Ledgewood related to the termination of his affiliation with Ledgewood and its redemption of his interest in the firm.  Mr. Brotman also receives certain debt service payments from Ledgewood related to the termination of his affiliation with the firm.   For the three and nine months ended September 30, 2016 the Company paid Ledgewood $137,000 and $305,000, respectively, in connection with legal services rendered to the Company. For the three and nine months ended September 30, 2015 the Company paid Ledgewood $13,000 and $348,000, respectively, in connection with legal services rendered to the Company. On September 8, 2016, as part of the merger with C-III, Mr. E. Cohen and Mr. Brotman stepped down from their positions in the Company, and, as a result, Ledgewood is no longer considered a related party of the Company.

53

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 18 - DISTRIBUTIONS

For the quarter ended September 30, 2016, the Company declared and subsequently paid a dividend of $0.42 per common share.

In order to qualify as a REIT, the Company must currently distribute at least 90% of its taxable income.  In addition, the Company must distribute 100% of its taxable income in order not to be subject to corporate federal income taxes on retained income.  The Company anticipates it will distribute substantially all of its taxable income to its stockholders.  Because taxable income differs from cash flow from operations due to non-cash revenues or expenses (such as provisions for loan and lease losses and depreciation), in certain circumstances, the Company may generate operating cash flow in excess of its distributions or, alternatively, may be required to borrow to make sufficient distribution payments.

The Company’s 2016 dividends are determined by the Company’s board of directors which also consider the composition of any dividends declared, including the option of paying a portion in cash and the balance in additional common shares.

The following tables present dividends declared (on a per share basis) for the first three quarters of 2016 and each of the quarters in 2015:

Common Stock
	Date Paid	Total Dividend Paid		Dividend Per Share
		(in thousands)
2016
March 31	April 28	$	13,073	$	0.42
June 30	July 28	$	13,051	$	0.42
September 30	October 28	$	13,012	$	0.42
2015
March 31	April 28	$	21,444	$	0.64
June 30	July 28	$	21,426	$	0.64
September 30	October 28	$	20,667	$	0.64
December 31	January 28, 2016	$	13,274	$	0.42

Preferred Stock
Series A						Series B					Series C
	Date Paid	Total Dividend Paid		Dividend Per Share		Date Paid	Total Dividend Paid		Dividend Per Share		Date Paid	Total Dividend Paid		Dividend Per Share
		(in thousands)					(in thousands)					(in thousands)
2016
March 31	May 2	$	568	$	0.531250	May 2	$	2,859	$	0.515625	May 2	$	2,588	$	0.539063
June 30	August 1	$	568	$	0.531250	August 1	$	2,859	$	0.515625	August 1	$	2,588	$	0.539063
September 30	October 31	$	568	$	0.531250	October 31	$	2,859	$	0.515625	October 31	$	2,588	$	0.539063
2015
March 31	April 30	$	568	$	0.531250	April 30	$	2,960	$	0.515625	April 30	$	2,588	$	0.539063
June 30	July 30	$	568	$	0.531250	July 30	$	2,960	$	0.515625	July 30	$	2,588	$	0.539063
September 30	October 30	$	568	$	0.531250	October 30	$	2,960	$	0.515625	October 30	$	2,588	$	0.539063
December 31	February 1, 2016	$	568	$	0.531250	February 1, 2016	$	2,960	$	0.515625	February 1, 2016	$	2,588	$	0.539063

54

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 19 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):

	Level 1		Level 2		Level 3		Total
As of September 30, 2016:
Assets:
Investment securities, trading	$	—	$	—	$	3,747	$	3,747
Investment securities available-for-sale	—		—		236,705		236,705
Loans held for sale	—		138,209		52,224		190,433
Derivatives	—		165		3,887		4,052
Total assets at fair value	$	—	$	138,374	$	296,563	$	434,937
Liabilities:
Derivatives	$	—	$	1,819	$	339	$	2,158
Total liabilities at fair value	$	—	$	1,819	$	339	$	2,158
As of December 31, 2015:
Assets:
Investment securities, trading	$	—	$	—	$	25,550	$	25,550
Investment securities available-for-sale	—		4,451		203,637		208,088
Loans held for sale	—		66,588		29,358		95,946
Derivatives	—		826		2,620		3,446
Total assets at fair value	$	—	$	71,865	$	261,165	$	333,030
Liabilities:
Derivatives	$	—	$	—	$	3,941	$	3,941
Total liabilities at fair value	$	—	$	—	$	3,941	$	3,941

The Company's residential mortgage loan portfolio included in loans held for sale is comprised of both agency loans and non-agency jumbo loans. The fair values of the Company's agency loan portfolio are generally classified as Level 2 in the fair value hierarchy, as those values are determined based on quoted market prices for similar assets or upon other observable inputs. The fair values of the Company's jumbo loan portfolio are generally classified as Level 3 in the fair value hierarchy, as those values are based upon the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan including the value attributable to servicing rights and credit risk. Loans are adjusted for spread to agency mortgage back securities with similar underlying mortgage loans, at rates ranging between 0.5% and 7.3%.

The fair value of interest rate lock commitments ("IRLCs") is estimated as the fair value of the of the underlying mortgage loans to be sold, which is based on quoted mortgage-backed securities ("MBSs") prices, plus the estimated fair value of the mortgage servicing rights, less the price committed to the borrower or mortgage lender and direct origination costs, adjusted for the probability that the mortgage will fund ("pull-through" rate). The estimated pull-through rate is based on the Company's historical data. IRLCs are included in derivatives on the Company's consolidated balance sheets.

The average pull-through rate used in measuring the fair value of IRLCs as of September 30, 2016 was 83.6% for assets and 90.5% for liabilities. The pull-through percentage is considered a significant unobservable input and is estimated based on changes in pricing and actual borrower behavior using a historical analysis of loan closing data. Generally, a change in interest rates is accompanied by a directionally opposite change in the assumption used for the pull-through percentage, and the impact to fair value of a change in pull-through would be partially offset by the related change in price.

55

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Forwards - residential mortgage loans fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market. The fair value of forward delivery commitments is primarily based upon the current agency mortgage-backed security market to-be-announced pricing specific to the loan program, delivery coupon and delivery date of the trade. Best effort sales commitments are also executed for certain loans at the time the borrower commitment is made. These best effort sales commitments are valued using the committed price to the counterparty against the current market price of the interest rate lock commitment or mortgage loan held for sale. Forwards are included in derivatives on the Company's consolidated balance sheets.

As part of the origination of a certain middle market loan, the Company received warrants as consideration at the loan's origination. The fair value of the warrants at December 31, 2015 was $1.1 million which was calculated by performing a Black-Scholes analysis. The significant unobservable inputs were a measure of 50.0% for the annual volatility over the term of the warrants and a market capitalization of $172.7 million. These warrants were settled in August 2016.

In accordance with guidance on fair value measurements and disclosures, the Company is not required to disclose quantitative information with respect to unobservable inputs contained in fair value measurements that are not developed by the Company. As a consequence, the Company has not disclosed such information associated with fair values obtained for investment securities, trading and investment securities available for sale from third-party pricing sources.

The following table presents additional information about assets that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs (in thousands):

	CMBS			ABS			Structured Finance Securities			Loans Held for Sale			Warrants			Interest Rate Lock Commitments			Forwards - Residential Mortgage Loans			RMBS		Total
Balance, January 1, 2016	$	159,424		$	44,213		$	25,550		$	29,358		$	1,051		$	1,224		$	345		$	—	$	261,165
Included in earnings (1)	(324		)	606			86			(390		)	(198		)	22,654			145			—		22,579
Purchases/Originations	5,138			44,819			—			123,471			—			—			—			—		173,428
Sales	—			(57,639		)	—			(97,791		)	—			—			—			—		(155,430		)
Paydowns	(25,554		)	(10,853		)	(227		)	(2,424		)	—			—			—			—		(39,058		)
Issuances	—			—			—			—			—			—			—			—		—
Settlements	—			(28,425		)	—			—			(853		)	(20,201		)	(280		)	—		(49,759		)
Capitalized Interest	—			12,552			190			—			—			—			—			—		12,742
Included in OCI	(1,146		)	(24,282		)	—			—			—			—			—			—		(25,428		)
Deconsolidation of VIEs	(55,776		)	172,154			(21,852		)	—			—			—			—			—		94,526
Transfers into Level 3 (2)	—			—			—						—			—			—			1,798		1,798
Balance, September 30, 2016	$	81,762		$	153,145		$	3,747		$	52,224		$	—		$	3,677		$	210		$	1,798	$	296,563

(1) Structured finance securities, loans held for sale, interest rate lock commitments, and forwards on residential mortgage loans include $86,000, $(33,000), $0, and $0, respectively, in earnings attributable to the change in unrealized gains or (losses) relating to assets still held at the reporting date for the nine months endedSeptember 30, 2016.

56

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The following table presents additional information about liabilities that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs (in thousands):

	Interest Rate Swaps			Forwards - Residential Mortgage Loans			Interest Rate Lock Commitments			Total
Balance, January 1, 2016	$	3,459		$	479		$	3		$	3,941
Included in earnings	50			249			43			342
Settlements	—			(393		)	(42		)	(435		)
Unrealized gains - included in accumulated other comprehensive income	(3,509		)	—			—			(3,509		)
Balance, September 30, 2016	$	—		$	335		$	4		$	339

The following table summarizes the financial assets and liabilities measured at fair value on a nonrecurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):    

	Level 1		Level 2		Level 3		Total
As of September 30, 2016:
Assets:
Loans held for sale	$	—	$	2,557	$	4,625	$	7,182
Impaired loans	—		—		30,074		30,074
Mortgage servicing rights (1)	—		—		25,284		25,284
Total assets at fair value	$	—	$	2,557	$	59,983	$	62,540
As of December 31, 2015:
Assets:
Loans held for sale	$	—	$	1,279	$	153	$	1,432
Impaired loans	—		262		129,433		129,695
Total assets at fair value	$	—	$	1,541	$	129,586	$	131,127

(1) See Note 11 for a description of the valuation techniques and key assumption types to the calculation of the fair value of mortgage servicing rights.

Loans held for sale consist of middle market loans identified for sale.  The fair value of Level 2 middle market loans held for sale are based on quoted market prices for similar assets or upon other observable inputs. The fair value of Level 3 middle market loans held for sale may be determined using a market or income approach methodology, both of which may require significant judgment or estimation for factors such as EBITDA multiples, market capitalization rates or discount rates, depending on the methodology used. The following unobservable input was used in the determination of fair value with respect to Level 3 middle market loans at September 30, 2016: EBITDA multiples ranged from 3.5x - 4.5x.

 Impaired loans consist of CRE loans for which an impairment analysis was conducted during the period. For the Company’s CRE loans for which there is no primary market, fair value is measured using a discounted cash flow analysis, appraisal or and other valuation technique; and these loans are classified as nonrecurring Level 3.

For both the three and nine months ended September 30, 2016 there were $8.1 million of nonrecurring fair value losses for specifically impaired loans. The amounts of nonrecurring fair value losses for specifically impaired loans for the three and nine months ended September 30, 2015 were $920,000 and $42.4 million, respectively. The amounts of nonrecurring fair value losses for loans held for sale for the three and nine months ended September 30, 2016 were $9.6 million and $21.8 million, respectively. The amounts of nonrecurring fair value losses for loans held for sale for the three and nine months ended September 30, 2015 were $35,000 and $841,000, respectively. Fair value was determined using an appraisal as a practical expedient to fair value.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value.  The fair values of the Company's short-term financial instruments such as cash and cash equivalents, restricted cash, principal paydown receivable, interest receivable, distribution payable, accrued interest expense, repurchase agreements and the secured

57

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

revolving credit agreement approximate their carrying value on the consolidated balance sheets.  The fair values of the Company’s investment securities, trading are reported in Note 5.  The fair values of the Company’s investment securities available-for-sale are reported in Note 6.  The fair values of the Company’s derivative instruments are reported in Note 20.

The fair value of the Company’s Level 2 loans held-for-investment are primarily measured using a third-party pricing service.  The fair value of the Company’s Level 3 loans held-for-investment are measured by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

CDO notes are valued using dealer quotes, typically the dealer who underwrote the CDO in which the notes are held.

Junior subordinated notes are estimated by discounted cash flows with discount rates of 13.14% and 13.15% and used in the evaluation of RCT I and RCT II.

The fair value of the convertible notes was determined using a discounted cash flow model that discounts the expected future cash flows using current interest rates on similar debts that do not have a conversion option. The 6.0% Convertible Senior Notes are discounted at a rate of 7.00% and the 8.0% Convertible Senior Notes are discounted at a rate of 8.60%. The fair value of the CRE portfolio was determined using a discounted cash flow model that discounts the expected future cash flows at current rates at which similar loans would be made to borrowers with similar credit ratings and with the same remaining maturities. Discount rates used range between 15%-25%.

Repurchase agreements and the senior secured revolving credit agreement are variable rate debt instruments indexed to LIBOR that reset periodically and, as a result, their carrying value approximates their fair value.

The fair values of the Company’s remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported in the following table (in thousands):

			Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2016:
Loans held-for-investment	$	1,406,581	$	1,410,911	$	—	$	50,933	$	1,359,978
CDO notes	$	528,971	$	524,864	$	—	$	—	$	524,864
Junior subordinated notes	$	49,586	$	25,372	$	—	$	—	$	25,372
Convertible notes	$	207,588	$	215,000	$	—	$	—	$	215,000
Repurchase agreements	$	613,127	$	616,575	$	—	$	—	$	616,575
Senior secured revolving credit agreement	$	—	$	—	$	—	$	—	$	—
As of December 31, 2015:
Loans held-for-investment	$	2,160,751	$	2,150,061	$	—	$	222,100	$	1,927,961
CDO notes	$	1,032,581	$	923,817	$	—	$	—	$	923,817
Junior subordinated notes	$	51,413	$	17,907	$	—	$	—	$	17,907
Convertible notes	$	205,484	$	205,484	$	—	$	—	$	205,484
Repurchase agreements	$	418,836	$	418,836	$	—	$	—	$	418,836
Senior secured revolving credit agreement	$	186,974	$	186,974	$	—	$	—	$	186,974

58

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 20 - MARKET RISK AND DERIVATIVE INSTRUMENTS

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." When deemed appropriate, the Company uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are interest rate risk and foreign currency exchange rate risk.

The Company may hold various derivatives in the ordinary course of business, including warrants, interest rate swaps, forward contracts, options and IRLCs. Warrants are securities that give the holder the right, but not the obligation, to purchase securities from an issuer at a specific price and within a specified time period. All warrants held by the Company had been settled as of September 30, 2016. Options are contracts sold by one party to another that give the buyer the right, but not the obligation, to buy or sell a financial asset at an agreed-upon price during a certain period of time or on a specific date. Interest rate swap agreements are contracts between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. Forward contracts represent future commitments to either purchase or to deliver loans (residential mortgage lending), securities (TBA securities) or a quantity of a currency (foreign currency hedging) at a predetermined future date, at a predetermined rate or price and are used to manage interest rate risk on loan commitments and mortgage loans held for sale as well as currency risk with respect to the Company's long positions in foreign currency-denominated investment securities. Rate lock commitments represent commitments to fund loans at a specific rate and by a specified time and are used to mitigate risk of changes in interest rate in the Company's residential mortgage loan portfolio.

A significant market risk to the Company is interest rate risk.  Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond the Company’s control.  Changes in the general level of interest rates can affect net interest income, which is the difference between the interest income earned on interest-earning assets and the interest expense incurred in connection with the interest-bearing liabilities, by affecting the spread between the interest-earning assets and interest-bearing liabilities.  Changes in the level of interest rates also can affect the value of the Company’s interest-earning assets and the Company’s ability to realize gains from the sale of these assets.  A decline in the value of the Company’s interest-earning assets pledged as collateral for borrowings could result in the counterparties demanding additional collateral pledges or liquidation of some of the existing collateral to reduce borrowing levels.

The Company seeks to manage the extent to which net income changes as a function of changes in interest rates by matching adjustable-rate assets with variable-rate borrowings. The Company seeks to mitigate the potential impact on net income of periodic and lifetime coupon adjustment restrictions in its investment portfolio by entering into interest rate hedging agreements such as interest rate caps and interest rate swaps.

On January 1, 2016, RREF CDO 2006-1 and RREF CDO 2007-1 were deconsolidated in accordance with new guidance on consolidation of VIEs (see Note 2). The Company deconsolidated six interest rate swap contracts as part of the deconsolidation. The aggregate notional amount of these deconsolidated interest rate swaps was $99.9 million at January 1, 2016.

During April 2016, the Company requested and canceled its remaining interest rate swap contract through accumulated other comprehensive income (loss), to be amortized through earnings over the life of the remaining debt. As of September 30, 2016, the Company had no interest rate swap contracts outstanding. The Company had master netting agreements with Credit Suisse International and Wells Fargo at September 30, 2016. Regulations promulgated under the Dodd-Frank Act mandate that the Company clear certain new interest rate swap transactions through a central counterparty. Transactions that are centrally cleared result in the Company facing a clearing house, rather than a swap dealer, as counterparty.  Central clearing requires the Company to post collateral in the form of initial and variation margin to satisfy potential future obligations.  As of September 30, 2016, there were no centrally cleared interest rate swap contracts. The Company classifies its hedges as cash flow hedges, which are hedges that eliminate the risk of changes in the cash flows of a financial asset or liability. The Company records changes in fair value of derivatives designated and effective as cash flow hedges in other comprehensive income, and records changes in fair value of derivatives designated and ineffective as cash flow hedges in earnings.

At December 31, 2015, the Company had nine interest rate swap contracts outstanding whereby the Company paid an average fixed rate of 5.38% and received a variable rate equal to one-month LIBOR.  The aggregate notional amount of these contracts was $102.8 million at December 31, 2015.  The counterparties for the Company’s designated interest rate hedge contracts are Credit Suisse International and Wells Fargo with which the Company has master netting agreements.

59

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The estimated fair value of the Company’s liability related to interest rate swaps was $0 and $3.5 million as of September 30, 2016 and December 31, 2015, respectively.  The Company had aggregate unrealized losses of $41,000 and $3.5 million on the interest rate swap agreements as of September 30, 2016 and December 31, 2015, respectively, which is recorded in accumulated other comprehensive income and a portion is recognized through earnings.  The amortization is reflected in interest expense in the Company’s consolidated statements of operations.

The Company is also exposed to foreign currency exchange risk, a form of risk that arises from the change in price of one currency against another. Substantially all of the Company's revenues are transacted in U.S. dollars; however, a significant amount of the Company's capital is exposed to other currencies, primarily the Euro and, to a lesser extent, the pound sterling. To address this market risk, the Company generally hedges foreign currency-denominated exposures (typically investments in debt instruments, including forecasted principal and interest payments) with foreign currency forward contracts. The Company classifies these hedges as fair value hedges, which are hedges that mitigate the risk of changes in the fair values of assets, liabilities, and certain types of firm commitments. The Company records changes in fair value of derivatives designated and effective as fair value hedges in earnings offset by corresponding changes in the fair values of the hedged items.

Forward contracts also contain an element of risk in that the counterparties may be unable to meet the terms of such agreements. In the event the parties to deliver commitments are unable to fulfill their obligations, the Company could potentially incur significant additional costs by replacing the positions at then current market rates. The Company manages its risk of exposure by limiting counterparties to those banks and institutions deemed appropriate by management. The Company does not expect any counterparty to default on its obligations and, therefore, the Company does not expect to incur any cost related to counterparty default.

The Company is exposed to interest rate risk on loans held for sale and IRLCs. As market interest rates increase or decrease, the fair value of mortgage loans held for sale and IRLCs will decline or increase accordingly. To offset this interest rate risk, the Company may enter into derivatives such as forward contracts to sell loans. The fair value of these forward sales contracts will change as market interest rates change, and the change in the value of these instruments is expected to largely, though not entirely, offset the change in fair value of loans held for sale and IRLCs. The objective of this activity is to minimize the exposure to losses on IRLCs and loans held for sale due to market interest rate fluctuations. The net effect of derivatives on earnings will depend on risk management activities and a variety of other factors, including market interest rate volatility, the amount of IRLCs that close, the ability to fill the forward contracts before expiration, and the time period required to close and sell loans.

During the warehousing phase of the Company’s investments in certain structured vehicles, the Company may enter into total return swaps to finance the Company’s exposure to assets that will ultimately be securitized. A total return swap is a swap agreement in which one party makes payments based on a set rate, while the other party makes payments based on the return of an underlying asset. Traditionally, the Company pays either an indexed or fixed interest payment to the warehousing lender and receives the net interest income and realized capital gains of the referenced portfolio of assets, generally loans, to be securitized that are owned and held by the warehousing lender. Upon the close of the warehousing period, the Company’s invested equity plus net interest and any capital gains realized during the warehousing period are returned to the Company. Additionally, upon the close of the securitization, the Company may purchase beneficial interests in the securitization at fair value.

60

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

The following tables present the fair value of the Company’s derivative financial instruments as well as their classification on the Company's consolidated balance sheets and on the consolidated statements of operations for the periods presented:

Fair Value of Derivative Instruments as of September 30, 2016

(in thousands)

	Asset Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements	$	260,970	Derivatives, at fair value	$	3,677
Forward contracts - residential mortgage lending	$	79,838	Derivatives, at fair value	$	237
Forward contracts - foreign currency, hedging (1)(2)	$	16,993	Derivatives, at fair value	$	137
Forward contracts - TBA securities	$	1,000	Derivatives, at fair value	$	1
	Liability Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements	$	2,636	Derivatives, at fair value	$	4
Forward contracts - residential mortgage lending	$	352,342	Derivatives, at fair value	$	1,897
Forward contracts - foreign currency, hedging (1)(3)	$	8,848	Derivatives, at fair value	$	104
Forward contracts - TBA securities	$	43,000	Derivatives, at fair value	$	153
Interest rate swap contracts, hedging	$	—	Accumulated other comprehensive (income) loss	$	41

(1) Foreign currency forward contracts are accounted for as fair value hedges.

(2) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts in an asset position was €15.1 million as of September 30, 2016.

(3) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts in a liability position was €7.9 million as of September 30, 2016.

Fair Value of Derivative Instruments as of December 31, 2015

(in thousands)

	Asset Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements (1)	$	105,385	Derivatives, at fair value	$	1,224
Forward contracts - residential mortgage lending	$	92,413	Derivatives, at fair value	$	345
Forward contracts - foreign currency, hedging (2)(3)	$	24,850	Derivatives, at fair value	$	727
Forward contracts - TBA securities	$	29,500	Derivatives, at fair value	$	99
Warrants (4)	$	553	Derivatives, at fair value	$	1,051
	Liability Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate swap contracts, hedging (5)	$	102,799	Derivatives, at fair value	$	3,459
Interest rate lock agreements (6)	$	505	Derivatives, at fair value	$	3
Forward contracts - residential mortgage lending	$	143,553	Derivatives, at fair value	$	479
Forward contracts - TBA securities	$	1,500	Derivatives, at fair value	$	—
Interest rate swap contracts, hedging	$	102,799	Accumulated other comprehensive (income) loss	$	(3,471	)

(1) The notional amount of the Company's IRLCs in an asset position is the total commitment weighted by the probability of closing the loan.

61

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

(2) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts was €22.9 million as of December 31, 2015.

(3) Foreign currency forward contracts are accounted for as fair value hedges.

(4) The notional amount of the Company's warrants is calculated by multiplying the number of shares available for purchase by the exercise price.

(5) Interest rate swap contracts are accounted for as cash flow hedges.

(6) The notional amount of the Company's IRLCs in a liability position is the total commitment weighted by the probability of closing the loan.

The Effect of Derivative Instruments on the Statements of Operations for the

Nine Months EndedSeptember 30, 2016 (in thousands)

	Derivatives
		Statement of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging		Interest expense	$	(95	)
Interest rate lock agreements		Gain (loss) on sale of residential mortgage loans	$	2,452
Forward contracts - residential mortgage lending		Gain (loss) on sale of residential mortgage loans	$	(1,577	)
Forward contracts - foreign currency, hedging		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	(733	)
Forward contracts - TBA securities		Gain (loss) on sale of residential mortgage loans	$	(1,070	)

(1) Negative values indicate a decrease to the associated consolidated statements of operations line items.

The Effect of Derivative Instruments on the Statements of Operations for the

Nine Months EndedSeptember 30, 2015 (in thousands)

	Derivatives
		Statement of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging		Interest expense	$	4,923
Interest rate swap contracts, hedging		Gain (loss) on sale of residential mortgage loans	$	(34	)
Interest rate lock agreements		Gain (loss) on sale of residential mortgage loans	$	1,128
Forward contracts - RMBS securities		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	(122	)
Forward contracts - residential mortgage lending		Gain (loss) on sale of residential mortgage loans	$	(197	)
Forward contracts - foreign currency, hedging		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	2,254
Options - U.S. Treasury futures		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	184
Forward contracts - TBA securities		Gain (loss) on sale of residential mortgage loans	$	415

(1) Negative values indicate a decrease to the associated consolidated statements of operations line items.

62

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

NOTE 21 - OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The following table presents a summary of the Company's offsetting of derivative assets for the periods presented (in thousands):

							(iv) Gross Amounts Not Offset in the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Assets		(ii) Gross Amounts Offset in the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Assets Included in the Consolidated Balance Sheets		Financial Instruments		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
As of September 30, 2016:
Derivative hedging instruments, at fair value	$	4,052	$	—	$	4,052	$	—	$	—	$	4,052
Total	$	4,052	$	—	$	4,052	$	—	$	—	$	4,052
As of December 31, 2015:
Derivative hedging instruments, at fair value	$	3,446	$	—	$	3,446	$	—	$	—	$	3,446
Total	$	3,446	$	—	$	3,446	$	—	$	—	$	3,446

The following table presents a summary of the Company's offsetting of financial liabilities and derivative liabilities for the periods presented as follows (in thousands):

							(iv) Gross Amounts Not Offset in the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Liabilities		(ii) Gross Amounts Offset in the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Liabilities Included in the Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged (2)		(v) = (iii) - (iv) Net Amount
As of September 30, 2016:
Derivative hedging instruments, at fair value	$	2,158	$	—	$	2,158	$	—	$	—	$	2,158
Repurchase agreements and term facilities (4)	613,734		—		613,734		613,734		—		—
Total	$	615,892	$	—	$	615,892	$	613,734	$	—	$	2,158
As of December 31, 2015:
Derivative hedging instruments, at fair value (3)	$	3,941	$	—	$	3,941	$	—	$	500	$	3,441
Repurchase agreements and term facilities (4)	418,836		—		418,836		418,836		—		—
Total	$	422,777	$	—	$	422,777	$	418,836	$	500	$	3,441

(1) Amounts represent collateral pledged that is available to be offset against liability balances associated with term facilities, repurchase agreements and derivative transactions.

63

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

(2) Amounts represent amounts pledged as collateral against derivative transactions.

(3) The fair value of securities and/or cash and cash equivalents pledged against the Company's swaps was $500,000 at December 31, 2015.

(4) The combined fair value of securities and loans pledged against the Company's various term facilities and repurchase agreements was $942.3 million and $643.2 million at September 30, 2016 and December 31, 2015, respectively.

In the Company's consolidated balance sheets, all balances associated with repurchase agreement and derivatives transactions are presented on a gross basis.

Certain of the Company's repurchase agreements and derivative transactions are governed by underlying agreements that generally provide for a right of offset in the event of default or in the event of a bankruptcy of either party to the transaction.

NOTE 22 - COMMITMENTS AND CONTINGENCIES

From time to time, the Company may become involved in litigation on various matters, including disputes arising out of loans in the Company's portfolio and agreements to purchase or sell assets. Given the nature of the Company's business activities, the Company considers these matters to be routine and in the ordinary conduct of its business. The resolution of these matters may result in adverse judgments, fines, penalties, injunctions and other relief against the Company as well as monetary payments or other agreements and obligations. Alternately, the Company may engage in settlement discussions on certain matters in order to avoid the additional costs of engaging in litigation.

In September 2015, Daren Levin filed a putative class action in the United States District Court for the Southern District of New York on behalf of all persons who purchased the Company's common stock between March 2, 2015 and August 4, 2015.  In November 2015, the Court appointed Douglas Drees as the lead plaintiff in the action, and thereafter entered a stipulation and order directing the lead plaintiff to file an amended complaint.  In February 2016, the lead plaintiff filed an amended complaint, alleging that the Company and certain of its officers and directors materially misrepresented certain risks of its commercial loan portfolio and its processes and controls for assessing the quality of its portfolio.  Based on these allegations, the amended complaint asserts claims for violation of the securities laws and seeks a variety of relief, including unspecified monetary damages as well as costs and attorneys’ fees.  In April 2016, the Company filed a motion to dismiss the amended complaint, which the court denied on October 5, 2016; and the discovery process is now expected to commence. The Company believes the amended complaint is without merit and intends to defend itself vigorously

                In December 2015, Josh Reaves filed a shareholder derivative suit in the Supreme Court of New York alleging that the Company's directors and certain officers breached their fiduciary duties by causing the Company to misrepresent certain risks in its commercial loan portfolio, by failing to employ adequate internal and financial controls and by failing to disclose the alleged internal control deficiencies.  The complaint purports to seek relief on behalf of the Company for unspecified damages as well as costs and attorneys’ fees.  The Company believes that the plaintiff, who failed to make a pre-suit demand on the board of directors, lacks standing to assert claims derivatively on the Company's behalf. In April 2016, the parties entered into a stipulation staying this proceeding until such time as the court ruled on the motion to dismiss the Levin action referenced above or certain other triggering events occur. That stay has now been lifted because the motion to dismiss the Levin action was denied.

PCM is a party to various claims and legal proceedings at various times. If PCM believes that a loss arising from any of these matters is probable and can be reasonably estimated, the loss is recorded. Currently, the only litigation involving PCM is related to claims for repurchases or indemnifications on loans that PCM has sold to investors.  Such claims are included in the reserve for mortgage repurchases and indemnifications. The reserve for mortgage repurchases and indemnifications was $5.2 million and $3.7 million as of September 30, 2016 and December 31, 2015, respectively.

Loans on one-to-four family residential mortgages originated by PCM are sold to various financial institutions and governmental entities with representations and warranties that are usual and customary for the industry. In the event of a breach of any of the representations and warranties related to a loan sold, PCM may be required to indemnify the investor against future losses, repurchase the mortgage loan or reimburse the investor for actual losses incurred (referred to as “make whole payments”).  The maximum exposure to credit loss in the event of an indemnification or loan repurchase would be the unpaid principal balance of the loan along with any premium paid by the investor when the loan was purchased, accrued but unpaid interest and other minor cost reimbursements.  This maximum exposure is at least partially mitigated by the value of the collateral underlying the mortgage loan.

64

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

On May 13, 2014, ResCap Liquidating Trust (“ResCap”), as successor to Residential Funding Company, LLC (“RFC”), filed an adversary proceeding against PCM in United States Bankruptcy Court of the Southern District of New York.  ResCap has sued some 90 sellers of residential mortgage loans for alleged breaches of warranty in various loans sold to RFC.  RFC contends that such breaches caused it damages from loan losses and liability to other transferee's of the loans. 

As of September 30, 2016, outstanding demands for indemnification, repurchase or make whole payments totaled approximately $20.5 million, of which a substantial portion related to loans sold to four investors prior to 2011.  In October 2016, PCM reached agreements to settle repurchase claims with two of the four investors, including those subject to the litigation initiated by ResCap in May 2014.  Pursuant to the settlement agreements, $2.1 million was fully reserved for at September 30, 2016.  These settlement agreements reduce the amount of outstanding demands against PCM for indemnification, repurchase or make whole payments to approximately $10.0 million.

The most significant remaining make whole demands against PCM are from Lehman Brothers Holding, Inc. (“LBHI”). On February 3, 2016, LBHI filed an adversary proceeding against PCM in United States Bankruptcy Court of the Southern District of New York.  LBHI has sued approximately 145 sellers of residential mortgage loans for alleged breaches of warranty in various loans sold to it.  LBHI contends that such breaches caused it damages from loan losses and liability to other transferees of the loans.  PCM intends to defend the action vigorously.

Unfunded commitments on the Company’s originated CRE loans generally fall into two categories: (1) pre-approved capital improvement projects; and (2) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, the Company would receive additional interest income on the advanced amount. Unfunded commitments on the Company's originated middle market loans fall into two categories: (1) revolving credit facility; and (2) unfunded commitments subject to the borrower meeting pre-specified criteria.

Except as previously discussed, the Company is unaware of any contingencies arising from such routine litigation that would require accrual or disclosure in the consolidated financial statements as of September 30, 2016.

NOTE 23 - SEGMENT REPORTING

The Company has five reportable operating segments: Commercial Real Estate Lending, Commercial Finance, Middle Market Lending, Residential Mortgage Lending, and Corporate & Other. The reportable operating segments are business units that offer different products and services. The Commercial Real Estate Lending operating segment includes the Company’s activities and operations related to commercial real estate loans, commercial real estate-related securities, and investments in real estate. The Commercial Finance operating segment includes the Company’s activities and operations related to bank loans, bank loan-related securities, and direct financing leases. The Middle Market Lending operating segment includes the Company’s activities and operations related to the origination and purchase of middle market loans. The Residential Mortgage Lending operating segment includes the Company’s activities and operations related to the origination and servicing of residential mortgage loans and the investment in RMBS. The Corporate & Other segment includes corporate level interest income, interest expense, and general and administrative expense.

The accounting policies of the operating segments are the same as those described in Note 2. The Company accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices. Relevant expenses incurred at the Corporate & Other segment are allocated to TRS subsidiaries based on their percentage of adjusted pre-tax net income (loss), which excludes unrealized gains and losses and provisions on loan and lease losses that are specific to the periods presented.

65

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

Summarized operating segment data are as follows (in thousands):

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Three Months Ended September 30, 2016
Interest income:
External customers	$	25,359		$	633		$	4,240		$	131		$	220		$	30,583
Other	6			724			27			—			12			769
Total interest income	25,365			1,357			4,267			131			232			31,352
Interest expense	8,573			—			467			—			5,080			14,120
Net interest income	16,792			1,357			3,800			131			(4,848		)	17,232
Gain on sale of mortgages	—			—			—			6,026			—			6,026
Amortization of MSRs	—			—			—			(1,491		)	—			(1,491		)
Other income from external customers	—			828			—			2,480			18			3,326
Total revenues	16,792			2,185			3,800			7,146			(4,830		)	25,093
Less:
Segment operating expenses	99			109			479			445			3,688			4,820
General and administrative	424			149			1,216			8,073			2,479			12,341
Depreciation and amortization	—			331			—			142			32			505
Impairment losses (4)	21,385			3,671			—			241			—			25,297
Provision (recovery) for loan and lease losses	7,997			(435		)	121			—			—			7,683
Equity in earnings of unconsolidated subsidiaries	(132		)	(900		)	—			—			—			(1,032		)
Other (income) expense	(32		)	29			9,631			(18		)	(793		)	8,817
Income (loss) before taxes	(12,949		)	(769		)	(7,647		)	(1,737		)	(10,236		)	(33,338		)
Income tax (expense) benefit	—			(1,236		)	—			(11,047		)	—			(12,283		)
Net income (loss)	$	(12,949	)	$	(2,005	)	$	(7,647	)	$	(12,784	)	$	(10,236	)	$	(45,621	)
	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Three Months Ended September 30, 2015
Interest income:
External customers	$	25,646		$	3,341		$	8,254		$	114		$	—		$	37,355
Other	12			803			2			144			7			968
Total interest income	25,658			4,144			8,256			258			7			38,323
Interest expense	9,004			368			1,480			433			5,045			16,330
Net interest income	16,654			3,776			6,776			(175		)	(5,038		)	21,993
Gain on sale of mortgages	—			—			—			3,154			—			3,154
Amortization of MSRs	—			—			—			(1,307		)	—			(1,307		)
Other income from external customers	—			1,033			—			1,055			17			2,105
Total revenues	16,654			4,809			6,776			2,727			(5,021		)	25,945
Less:
Segment operating expenses	50			272			1,240			71			1,361			2,994
General and administrative	633			569			978			6,317			1,726			10,223
Depreciation and amortization	—			454			—			142			32			628
Provision (recovery) for loan and lease losses	(46		)	179			901			—			—			1,034
Equity in earnings of unconsolidated subsidiaries	—			(333		)	—			—			(1		)	(334		)
Other (income) expense	6,352			(8,162		)	147			935			(798		)	(1,526		)
Income (loss) before taxes	9,665			11,830			3,510			(4,738		)	(7,341		)	12,926
Income tax (expense) benefit	—			(286		)	—			2,161			(79		)	1,796
Net income (loss)	$	9,665		$	11,544		$	3,510		$	(2,577	)	$	(7,420	)	$	14,722

66

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Nine Months Ended September 30, 2016:
Interest income:
External customers	$	75,600		$	1,999		$	24,620		$	329		$	333		$	102,881
Other	30			4,221			43			—			23			4,317
Total interest income	75,630			6,220			24,663			329			356			107,198
Interest expense	25,160			—			6,181			—			15,240			46,581
Net interest income	50,470			6,220			18,482			329			(14,884		)	60,617
Gain on sale of mortgages	—			—			—			15,607			—			15,607
Amortization of MSRs	—			—			—			(3,753		)	—			(3,753		)
Other income from external customers	—			2,162			—			2,809			54			5,025
Total revenues	50,470			8,382			18,482			14,992			(14,830		)	77,496
Less:
Segment operating expenses	233			679			2,990			1,354			9,382			14,638
General and administrative	1,681			847			3,229			21,262			6,334			33,353
Depreciation and amortization	—			1,132			4			413			101			1,650
Impairment losses (4)	21,385			3,671			—			241			—			25,297
Provision (recovery) for loan and lease losses	7,997			(358		)	12,180			—			—			19,819
Equity in earnings of unconsolidated subsidiaries	(585		)	(5,365		)	—			—			—			(5,950		)
Other (income) expense	(875		)	(947		)	9,828			(45		)	(1,758		)	6,203
Income (loss) before taxes	20,634			8,723			(9,749		)	(8,233		)	(28,889		)	(17,514		)
Income tax (expense) benefit	—			(973		)	—			(8,455		)	(130		)	(9,558		)
Net income (loss)	$	20,634		$	7,750		$	(9,749	)	$	(16,688	)	$	(29,019	)	$	(27,072	)

67

RESOURCE CAPITAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SEPTEMBER 30, 2016

(unaudited)

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending		Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Nine Months Ended September 30, 2015:
Interest income:
External customers	$	70,237		$	14,499		$	22,089	$	466		$	—		$	107,291
Other	82			2,607			4		145			81			2,919
Total interest income	70,319			17,106			22,093		611			81			110,210
Interest expense	23,933			2,225			3,682		721			14,773			45,334
Net interest income	46,386			14,881			18,411		(110		)	(14,692		)	64,876
Gain on sale of mortgages	—			—			—		11,594			—			11,594
Amortization of MSRs	—			—			—		(3,138		)	—			(3,138		)
Other income from external customers	—			3,398			—		4,506			51			7,955
Total revenues	46,386			18,279			18,411		12,852			(14,641		)	81,287
Less:
Segment operating expenses	56			940			2,444		1,615			6,838			11,893
General and administrative	1,382			2,238			2,262		18,009			5,750			29,641
Depreciation and amortization	—			1,346			1		372			95			1,814
Impairment losses	—			59			—		—			—			59
Provision (recovery) for loan and lease losses	38,025			1,696			4,223		(110		)	—			43,834
Equity in earnings of unconsolidated subsidiaries	(46		)	(1,655		)	—		—			(1		)	(1,702		)
Other (income) expense	7,200			(16,856		)	39		(4,618		)	(2,963		)	(17,198		)
Income (loss) before taxes	(231		)	30,511			9,442		(2,416		)	(24,360		)	12,946
Income tax (expense) benefit	(39		)	(1,782		)	—		(821		)	(327		)	(2,969		)
Net income (loss)	$	(270	)	$	28,729		$	9,442	$	(3,237	)	$	(24,687	)	$	9,977

(1) Includes interest expense for the Convertible Senior Notes of $4.4 million and $13.3 million for the three and nine months ended September 30, 2016 and $4.4 million and $13.0 million for the three and nine months ended September 30, 2015.

(2) Includes interest expense for the Unsecured Junior Subordinated Debentures of $636,000 and $1.9 million for the three and nine months ended September 30, 2016 and $610,000 and $1.8 million for the three and nine months ended September 30, 2015.

(3) Includes general corporate expenses not allocable to any particular operating segment.

(4) Includes impairment on intangible assets in the Commercial Finance segment of $3.7 million for the three and nine months ended September 30, 2016.

The following table presents total assets by segment for the periods indicated (in thousands):

Total Assets (2)	Commercial Real Estate Lending		Commercial Finance		Middle Market Lending		Residential Mortgage Lending		Corporate & Other (1)		Total
September 30, 2016	$	1,685,295	$	129,441	$	60,935	$	256,491	$	25,316	$	2,157,478
December 31, 2015	$	1,907,951	$	298,028	$	384,973	$	149,351	$	20,129	$	2,760,432

(1) Includes assets not allocable to any particular operating segment.

(2) On January 1, 2016, we adopted amendments to the consolidation accounting guidance (see Note 2) and deconsolidated two and three VIEs in the Commercial Real Estate Lending and Commercial Finance operating segments, respectively.

NOTE 24 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this report and determined that there have not been any events that have occurred that would require adjustments to or disclosures in the consolidated financial statements, except the following:

Subsequent to quarter end, the Company's board of directors approved the framework of a plan to streamline the Company's operations by focusing on CRE lending and exiting underperforming non-CRE businesses and investments. As part of this plan, the Company expects to discontinue operations in its middle market lending segment, its residential mortgage lending segment, and other non-real estate related portfolios. In addition, the Company intends to sell several of its legacy CRE loans and classify them as loans, held for sale as of December 31, 2016.

68

ITEM 2 . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The following discussion provides information to assist you in understanding our financial condition and results of operations.  This discussion should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report.  This discussion contains forward-looking statements.  Actual results could differ materially from those expressed in or implied by those forward-looking statements.  Additionally, please see the sections “Forward-Looking Statements” and “Risk Factors” for a discussion of certain risks, uncertainties and assumptions associated with those statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.

The following discussion provides information to assist you in understanding our financial condition and results of operations.  This discussion should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report.  This discussion contains forward-looking statements.  Actual results could differ materially from those expressed in or implied by those forward-looking statements.  Additionally, please see the sections "Forward-Looking Statements" and "Risk Factors" for a discussion of certain risks, uncertainties and assumptions associated with those statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.

We are a commercial mortgage real estate investment trust ("REIT") focused on originating, holding and managing commercial real estate ("CRE") debt investments. We also have made commercial finance investments. We are organized and conduct our operations to qualify as a REIT under Subchapter M of the Internal Revenue Code of 1986, as amended.  Our objective is to provide our stockholders with total returns over time, including quarterly distributions and capital appreciation, while seeking to manage the risks associated with our investment strategies.  We invest in a combination of real estate debt investments and have invested, to a lesser extent, in higher-yielding commercial finance assets.  We have financed a substantial portion of our portfolio investments through borrowing strategies seeking to match the maturities and repricing dates of our financings with the maturities and repricing dates of those investments, and have sought to mitigate interest rate risk through derivative instruments.

We are externally managed by Resource Capital Manager, Inc., or the Manager, an indirect wholly-owned subsidiary of Resource America, Inc., (formerly traded on NASDAQ: REXI) or Resource America, a specialized asset management company that uses industry-specific expertise to evaluate, originate, service and manage investment opportunities through its CRE, financial fund management and commercial finance operating segments. On September 8, 2016, Resource America was acquired by C-III Capital Partners LLC ("C-III"), a leading CRE services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, CDO management, principal investment, investment sales and multifamily property management. As part of the transaction, C-III took over control of the manager and became the beneficial owner of 715,396 shares of our common equity (2.3% of our outstanding shares) held by Resource America. As part of the acquisition of Resource America by C-III, we were paid a $1.5 million consent fee by Resource America for having waived our right to terminate the Management Agreement as a result of the change of control of our Manager. The Manager now draws upon C-III and Resource America’s management teams and their collective investment experience to provide its services. C-III has received approval from our board of directors to execute a strategic plan (the "Plan") to focus our strategy on CRE debt investments. The Plan contemplates disposing of certain legacy CRE debt instruments, exiting underperforming non-CRE businesses and investments, and establishing a dividend policy based on sustainable earnings. We expect to implement the Plan over the next 12 to 18 months. 

During the quarter ended September 30, 2016, we recognized a net loss of $51.6 million, as our credit review process resulted in several significant write-downs and adjustments during the period. We recorded additional provisions for loan losses of $8.1 million on two legacy real estate loans. A middle market loan held for sale, which was previously credit impaired, required a $9.6 million loss to recognize adjusted fair value. Securities available-for-sale had other-than-temporary impairments of $25.3 million. Most of these impairments came from our legacy real estate portfolio, specifically in the RREF CDP 2007-01 securitization as the underlying collateral suffered impairments during the period. Upon making the decision to dispose of the non-CRE businesses, which are typically done through taxable REIT subsidiaries, we re-evaluated our net deferred tax asset, which resulted in a net write-down of $12.3 million. In addition to the shift away from non-CRE businesses, we plan to dispose of our legacy real estate loans, and will move those loans to hold for sale status in the fourth quarter.

We began the process of disposing of several ancillary businesses as part of the Plan during the fourth quarter of 2016. The anticipated dispositions include our residential mortgage origination segment acquired in late 2013, and the balance of our middle market lending segment, which currently holds syndicated bank loans and a middle market direct origination loan that is currently classified as loans held for sale. We expect to move these segments to discontinued operations and also to move our life

69

settlement contract investment as well as several legacy real estate loans to a held for sale classification in the fourth quarter of 2016. As part of this reclassification, we estimate impairments of $11.0 million to $14.0 million to fair value the assets and liabilities of these held for sale investments during the fourth quarter.

In August 2016, we sold our interest in Northport TRS, LLC our self-originated middle market lending business. We had also experienced a reduction in our other commercial finance assets that began to liquidate in 2014 and we saw this trend continue through 2015 into 2016. We expect to liquidate our last bank loan CLO, Apidos Cinco in November 2016.

During the latter half of 2015 our common shares began to trade at prices well below our book value per share. We had previously sought to enhance shareholder value by instituting, on August 4, 2015, a $50.0 million securities repurchase program. Through September 30, 2016, we repurchased approximately $38.3 million of our common and preferred shares. However, in September 2016, we stopped buying shares and instead began to marshal resources as part of our strategy to transform our operations into a real estate focused enterprise.

We generate our income primarily from the spread between the revenues we receive from our assets and the cost to finance the purchase of those assets, from management of assets and from hedging interest rate risks.  Historically, we have generated revenues from the interest and fees we’ve earned on our whole loans, commercial mortgage-backed securities, or CMBS, middle market loans, other asset-backed securities, or ABS, and structured note investments.  We also generated revenues from fees we’ve received for the management of externally originated bank loans, from our residential mortgage origination business and from our investment in an equipment leasing business.  Given the new business strategy of focusing on commercial real estate activities, we expect to shift away from these ancillary businesses as we dispose of those investments and re-deploy the proceeds into commercial real estate activities.

Historically, we have used a substantial amount of leverage to enhance our returns and we have financed each of our different asset classes with different degrees of leverage.  The cost of borrowings to finance our investments is a significant part of our expenses.  Our net income depends on our ability to control these expenses relative to our revenue.    As it relates to our commercial real estate loan portfolio, we historically have used repurchase agreements as a short-term financing source, and CDOs and, to a lesser extent, other term financing as long-term financing sources and expect to continue to use these financing sources into the near term future.          

The current state of moderate growth in the United States economy has allowed us to make new investments, particularly in our primary business of commercial real estate lending. During 2015 and through September 30, 2016, we have underwritten 47 new commercial real estate, or CRE, loans for a total of $914.4 million. These loans were initially financed in part through our CRE term facilities and then financed longer-term through CRE securitizations.   As a result of the planned dispositions coupled with available debt financing of over $390.0 million, we intend to begin to grow our commercial real estate lending program, which will allow us to maintain a market presence and working relationships with our commercial real estate borrowers.

As of September 30, 2016, and as we move toward a real estate centric business, we had allocated our invested equity capital among our targeted asset classes as follows: 73% in CRE assets, 17% in commercial finance assets, 7% in the residential mortgage lending business and 3% in other investments. As of December 31, 2015, we had allocated our invested equity capital as follows: 62% in CRE assets, 28% in commercial finance assets, 6% in the residential mortgage lending business and 4% in other assets.

Results of Operations

Our net loss allocable to common shares for the three and nine months ended September 30, 2016 was $51.6 million or $(1.69) per share-basic ($(1.69) per share-diluted) and $43.4 million or $(1.42) per share-basic ($(1.42) per share-diluted) respectively, as compared to net income allocable to common shares of $6.8 million, or $0.21 per share-basic ($0.21 per share-diluted) and a net loss of $14.8 million or $(0.45) per share-basic ($(0.45) per share-diluted) for the three and nine months ended September 30, 2015 respectively.

70

Interest Income

The following tables set forth information relating to our interest income recognized for the periods presented (in thousands, except percentages):

	For the Three Months Ended			For the Three Months Ended
	September 30, 2016			September 30, 2015
	Weighted Average			Weighted Average
	Yield	Balance		Yield	Balance
Interest income:
Interest income from loans:
Commercial real estate loans	6.08%	$	1,401,304	5.37%	$	1,644,900
Middle market loans	9.85%	$	168,402	9.55%	$	338,271
Bank loans	—%	$	—	4.09%	$	164,181
Interest income from securities:
ABS	9.77%	$	140,547	14.07%	$	48,308
CMBS-private placement	5.13%	$	84,141	7.10%	$	182,171
RMBS	4.66%	$	1,921	5.64%	$	2,304
Corporate bonds	—%	$	—	5.14%	$	2,455
Preference payments on structured notes	10.23%	$	28,065	14.62%	$	22,275

	For the Nine Months Ended			For the Nine Months Ended
	September 30, 2016			September 30, 2015
	Weighted Average			Weighted Average
	Yield	Balance		Yield	Balance
Interest income:
Interest income from loans:
Commercial real estate loans	5.94%	$	1,433,327	5.41%	$	1,532,849
Middle market loans	11.34%	$	285,336	9.68%	$	300,411
Bank loans	—%	$	—	4.49%	$	248,518
Interest income from securities:
ABS	8.84%	$	154,265	15.74%	$	51,301
CMBS-private placement	4.97%	$	89,851	5.62%	$	189,267
RMBS	4.77%	$	2,002	4.14%	$	13,374
Corporate bonds	—%	$	—	5.14%	$	2,455
Preference payments on structured notes	16.32%	$	34,457	14.03%	$	24,830

71

The following tables summarize interest income for the periods indicated (in thousands, except percentages):

Type of Security	Weighted Average Coupon Interest		Unamortized (Discount) Premium			Net  Amortization/ Accretion			Interest Income			Fee Income		Total
For the Three Months Ended September 30, 2016:
Commercial real estate loans	5.39	%	$	(6,651	)	$	(46	)	$	19,405		$	2,404	$	21,763
Middle market loans	9.81	%	$	(312	)	18			4,222			—		4,240
Bank loans	—	%	$	—		—			—			—		—
Total interest income from loans						(28		)	23,627			2,404		26,003
ABS	9.84	%	$	—		—			3,461			—		3,461
CMBS-private placement	5.24	%	$	281		(23		)	1,146			—		1,123
RMBS	4.66	%	$	35		18			—			—		18
Corporate bonds	—	%	$	—		—			—			—		—
Total interest income from securities						(5		)	4,607			—		4,602
Direct Financing Leases	N/A		N/A			—			(22		)	—		(22		)
Total interest income from leasing						—			(22		)	—		(22		)
Preference payments on structured notes	N/A		N/A			—			724			—		724
Other	N/A		N/A			—			45			—		45
Total interest income - other						—			769			—		769
Total interest income						$	(33	)	$	28,981		$	2,404	$	31,352
For the Three Months Ended September 30, 2015:
Commercial real estate loans	5.04	%	$	(9,071	)	$	11		$	22,109		$	298	$	22,418
Middle market loans	9.44	%	$	(477	)	42			8,159			52		8,253
Bank loans	3.73	%	$	(424	)	107			1,667			52		1,826
Total interest income from loans						160			31,935			402		32,497
ABS	13.26	%	$	(629	)	53			1,533			—		1,586
CMBS-private placement	5.22	%	$	(1,379	)	826			2,402			—		3,228
RMBS	5.22	%	$	27		(2		)	22			—		20
Corporate bonds	4.88	%	$	(35	)	2			30			—		32
Total interest income from securities						879			3,987			—		4,866
Direct Financing Leases	N/A		N/A						(8		)			(8		)
Total interest income from leasing						—			(8		)	—		(8		)
Preference payments on structured notes	N/A		N/A			—			803			—		803
Other	N/A		N/A			—			165			—		165
Total interest income - other						—			968			—		968
Total interest income						$	1,039		$	36,882		$	402	$	38,323

72

Type of Security	Weighted Average Coupon Interest		Unamortized (Discount) Premium			Net  Amortization/ Accretion			Interest Income			Fee Income		Total
For the Nine Months Ended September 30, 2016:
Commercial real estate loans	5.37	%	$	(6,651	)	$	(46	)	$	59,950		$	4,610	$	64,514
Middle market loans	9.81	%	$	(312	)	725			21,339			2,598		24,662
Bank loans	—	%	$	—		—			45			6		51
Total interest income from loans						679			81,334			7,214		89,227
ABS	6.82	%	$	—		—			10,246			—		10,246
CMBS-private placement	5.20	%	$	281		(160		)	3,558			—		3,398
RMBS	4.77	%	$	35		47			—			—		47
Total interest income from securities						(113		)	13,804			—		13,691
Direct Financing Leases	N/A		N/A			—			(37		)	—		(37		)
Total interest income from leasing						—			(37		)	—		(37		)
Preference payments on structured notes	N/A		N/A			—			4,221			—		4,221
Other	N/A		N/A			—			96			—		96
Total interest income - other						—			4,317			—		4,317
Total interest income						$	566		$	99,418		$	7,214	$	107,198
For the Nine Months Ended September 30, 2015:
Commercial real estate loans	5.14	%	$	(9,071	)	$	31		$	61,099		$	1,051	$	62,181
Middle market loans	9.41	%	$	(477	)	72			21,442			547		22,061
Bank loans	3.77	%	$	(424	)	551			7,387			443		8,381
Total interest income from loans						654			89,928			2,041		92,623
ABS	14.39	%	$	(629	)	270			5,655			—		5,925
CMBS-private placement	5.08	%	$	(1,379	)	762			7,293			—		8,055
RMBS	4.88	%	$	27		(36		)	379			—		343
Corporate bonds	4.88	%	$	(35	)	5			90			—		95
Total interest income from securities						1,001			13,417			—		14,418
Direct Financing Leases	N/A		N/A			—			250			—		250
Total interest income from leasing						—			250			—		250
Preference payments on structured notes	N/A		N/A			—			2,613			—		2,613
Other	N/A		N/A			—			306			—		306
Total interest income - other						—			2,919			—		2,919
Total interest income						$	1,655		$	106,514		$	2,041	$	110,210

73

	For the Three Months Ended
	September 30,
	2016			2015			Dollar Change			Percent Change
Interest income:
Interest income from loans:
Commercial real estate loans	$	21,763		$	22,418		$	(655	)	(3	)%
Middle market loans	4,240			8,253			(4,013		)	(49	)%
Bank loans	—			1,826			(1,826		)	(100	)%
Total interest income from loans	26,003			32,497			(6,494		)	(20	)%
Interest income from securities:
ABS	3,461			1,586			1,875			118	%
CMBS-private placement	1,123			3,228			(2,105		)	(65	)%
RMBS	18			20			(2		)	(10	)%
Corporate bonds	—			32			(32		)	(100	)%
Total interest income from securities	4,602			4,866			(264		)	(5	)%
Interest income from leasing:
Direct financing leases	(22		)	(8		)	(14		)	(175	)%
Total interest income from leasing	(22		)	(8		)	(14		)	(175	)%
Interest income - other:
Preference payments on structured notes	724			803			(79		)	(10	)%
Temporary investment in over-night      repurchase agreements	45			165			(120		)	(73	)%
Total interest income - other	769			968			(199		)	(21	)%
Total interest income	$	31,352		$	38,323		$	(6,971	)	(18	)%

74

	For the Nine Months Ended
	September 30,
	2016			2015		Dollar Change			Percent Change
Interest income:
Interest income from loans:
Commercial real estate loans	$	64,514		$	62,181	$	2,333		4	%
Middle market loans	24,662			22,061		2,601			12	%
Bank loans	51			8,381		(8,330		)	(99	)%
Total interest income from loans	89,227			92,623		(3,396		)	(4	)%
Interest income from securities:
ABS	10,246			5,925		4,321			73	%
CMBS-private placement	3,398			8,055		(4,657		)	(58	)%
Corporate bonds	—			95		(95		)	(100	)%
RMBS	47			343		(296		)	(86	)%
Total interest income from securities	13,691			14,418		(727		)	(5	)%
Interest income from leasing:
Direct financing leases	(37		)	250		(287		)	(115	)%
Total interest income from leasing	(37		)	250		(287		)	(115	)%
Interest income - other:
Preference payments on structured notes	4,221			2,613		1,608			62	%
Temporary investment in over-night      repurchase agreements	96			306		(210		)	(69	)%
Total interest income - other	4,317			2,919		1,398			48	%
Total interest income	$	107,198		$	110,210	$	(3,012	)	(3	)%

Three and Nine Months Ended September 30, 2016 as compared to Three and Nine Months Ended September 30, 2015

Aggregate interest income decreased$7.0 million and $3.0 million to $31.4 million and $107.2 million for the three and nine months ended September 30, 2016, respectively, as compared to $38.3 million and $110.2 million for the three and nine months ended September 30, 2015, respectively. We attribute these changes to the following:

Interest Income from Loans

Commercial real estate loans. Interest income on CRE loans decreased$655,000 and increased $2.3 million to $21.8 million and $64.5 million for the three and nine months ended September 30, 2016, respectively. The decrease for the three months ended September 30, 2016 is primarily due to the deconsolidation of our CRE loans at RREF 2006-1 and RREF 2007-1. The increase for the nine months endedSeptember 30, 2016 is attributable to the origination of loans in our most recent CRE securitization, RCC 2015- CRE 4, which closed in August 2015.

Middle market loans. On August 4, 2016, we sold Northport TRS, LLC, selling substantially all of our direct middle market loans and one syndicated loan with a combined par balance of $257.3 million. This reduced the weighted average balance to $168.4 million and $285.3 million for the three and nine months ended September 30, 2016, respectively, as compared to a weighted average balance of $338.3 million and $300.4 million for the three and nine months ended September 30, 2015. The weighted average yield on investments increased from 9.55% and 9.68% for the three and nine months ended September 30, 2015 to 9.85% and 11.34% for the three and nine months ended September 30, 2016, respectively, which was primarily driven by $2.6 million of prepayment fees earned during for the nine months ended September 30, 2016.

75

Bank loans. The weighted average loan balance on our bank loan portfolio decreased by $164.2 million and $248.5 million for three and nine months ended September 30, 2016, respectively, due to the liquidation of Apidos CDO III, Ltd. (“Apidos CDO III”) in June 2015 and the deconsolidation of Apidos Cinco CDO as of January 1, 2016, which is now recorded in interest income from securities.

Interest Income from Securities

Asset-Backed Securities, or ABS. Interest income from ABS increased$1.9 million and $4.3 million to $3.5 million and $10.2 million for the three and nine months ended September 30, 2016, respectively. The increase for the three and nine months ended September 30, 2016 is primarily attributable to the deconsolidation of RREF CDO 2006-1, RREF CDO 2007-1, and Apidos Cinco CDO on January 1, 2016. As a result of the deconsolidation, the interest income derived from ABS is now reported as interest income from available-for-sale securities as compared to loan interest income in the prior year. The deconsolidation significantly contributed to the increase in the weighted average balance of ABS from $48.3 million to $140.5 million and from $51.3 million to $154.3 million for the three and nine months ended September 30, 2016, respectively. The decrease in weighted average yield from 14.07% to 9.77% and from 15.74% to 8.84% directly relates to the deconsolidation of RCM Global and Pelium Capital whose income is now reported under earnings in unconsolidated entities.

Interest income - other.  Interest income - other decreased$199,000 and increased $1.4 million to $769,000 and $4.3 million for the three and nine months ended September 30, 2016, respectively, as compared to $968,000 and $2.9 million for the three and nine months ended September 30, 2015. The decrease for the three months ended September 30, 2016 is related to the warehouse period ending on our investment in ZWH4, LLC ("ZAIS") in May 2016. We earned $450,000 of income on this investment in the three months ended September 30, 2015. This decrease was partially offset by an increase of $138,000 in other interest income. The increase for the nine months ended September 30, 2016 is attributable to our investment in Harvest XV, in which $2.1 million in income was earned. This was partially offset by a decrease in $760,000 of income due to the sale of Harvest X in September 2015.

Interest Expense

The following tables set forth information relating to our interest expense incurred for the periods presented by asset class (in thousands, except percentages):

	For the Three Months Ended				For the Three Months Ended
	September 30, 2016				September 30, 2015
	Weighted Average				Weighted Average
	Cost of Funds		Balance		Cost of Funds		Balance
Interest expense:
Commercial real estate loans	3.43	%	$	933,616	2.53	%	$	1,095,272
Convertible senior notes	8.27	%	$	215,000	8.25	%	$	215,000
Middle market loans	3.14	%	$	53,218	3.13	%	$	155,130
CMBS-private placement	2.18	%	$	65,845	1.58	%	$	81,056
General	4.70	%	$	51,548	5.73	%	$	51,548
Hedging instruments	—	%	$	—	6.65	%	$	106,747
Bank loans	—	%	$	—	0.98	%	$	179,371
Securitized borrowings	—	%	$	—	—	%	$	5,193

76

	For the Nine Months Ended				For the Nine Months Ended
	September 30, 2016				September 30, 2015
	Weighted Average				Weighted Average
	Cost of Funds		Balance		Cost of Funds		Balance
Interest expense:
Commercial real estate loans	3.19	%	$	992,050	2.36	%	$	1,018,506
Convertible senior notes	8.27	%	$	215,000	8.22	%	$	510,604
Middle market loans	6.64	%	$	122,887	3.04	%	$	134,588
CMBS-private placement	2.05	%	$	65,583	1.57	%	$	81,014
General	4.61	%	$	51,548	5.02	%	$	51,548
Hedging instruments	5.25	%	$	1,880	5.75	%	$	114,826
Bank loans	—	%	$	—	1.05	%	$	255,284
RMBS	—	%	$	—	5.17	%	$	8,403
Securitized borrowings	—	%	$	—	4.56	%	$	5,193

Type of Security	Coupon Interest		Unamortized Deferred Debt Expense		Net Amortization		Interest Expense			Total
For the Three Months Ended September 30, 2016:
Commercial real estate loans	2.60	%	$	4,149	$	1,646	$	6,418		$	8,064
Convertible senior notes	6.93	%	$	3,022	709		3,725			4,434
Middle market loans	—	%	$	—	—		467			467
General	4.62	%	$	—	27		619			646
CMBS-private placement	2.18	%	$	3	—		485			485
Hedging	—	%	$	—	—		24			24
Total interest expense					$	2,382	$	11,738		$	14,120
For the Three Months Ended September 30, 2015:
Commercial real estate loans	1.90	%	$	256	$	1,713	$	5,475		7,188
Convertible senior notes	6.93	%	$	4,193	708		3,725			4,433
Hedging	5.37	%	$	—	—		1,771			1,771
Middle market loans	3.13	%	$	3,258	233		1,247			1,480
Bank loans	0.98	%	$	—	—		452			452
General	4.24	%	$	188	52		698			750
CMBS-private placement	1.57	%	$	2	1		332			333
Securitized borrowings	—	%	$	—	—		(77		)	(77		)
Total interest expense					$	2,707	$	13,623		$	16,330

77

Type of Security	Coupon Interest		Unamortized Deferred Debt Expense		Net Amortization		Interest Expense		Total
For the Nine Months Ended September 30, 2016:
Commercial real estate loans	2.49	%	$	4,149	$	4,264	$	19,618	$	23,882
Convertible senior notes	6.93	%	$	3,022	2,123		11,175		13,298
Middle market loans	3.31	%	$	—	3,026		3,155		6,181
General	4.57	%	$	—	135		1,806		1,941
CMBS-private placement	2.05	%	$	3	—		1,184		1,184
Hedging	5.25	%	$	—	—		95		95
Total interest expense					$	9,548	$	37,033	$	46,581
For the Nine Months Ended September 30, 2015:
Commercial real estate loans	1.89	%	$	256	$	3,418	$	14,857	$	18,275
Convertible senior notes	6.91	%	$	4,193	2,068		10,886		12,954
Hedging	5.28	%	$	—	—		4,923		4,923
Middle market loans	3.04	%	$	3,258	551		3,131		3,682
Bank loans	0.95	%	$	—	201		1,853		2,054
General	4.22	%	$	188	155		1,804		1,959
CMBS-private placement	1.57	%	$	2	—		982		982
RMBS	1.17	%	$	—	—		327		327
Securitized borrowings	—	%	$	—	—		178		178
Total interest expense					$	6,393	$	38,941	$	45,334

	For the Three Months Ended
	September 30,
	2016		2015			Dollar Change			Percent Change
Interest expense:
Commercial real estate loans	$	8,064	$	7,188		$	876		12	%
Convertible senior notes	4,434		4,433			1			—	%
Middle market loans	467		1,480			(1,013		)	(68	)%
General	646		750			(104		)	(14	)%
CMBS-private placement	485		333			152			46	%
Hedging instruments	24		1,771			(1,747		)	(99	)%
Bank loans	—		452			(452		)	(100	)%
Securitized borrowings	—		(77		)	77			(100	)%
Total interest expense	$	14,120	$	16,330		$	(2,210	)	(14	)%

78

	For the Nine Months Ended
	September 30,
	2016		2015		Dollar Change			Percent Change
Interest expense:
Commercial real estate loans	$	23,882	$	18,275	$	5,607		31	%
Convertible senior notes	13,298		12,954		344			3	%
Middle market loans	6,181		3,682		2,499			68	%
General	1,941		1,959		(18		)	(1	)%
CMBS-private placement	1,184		982		202			21	%
Hedging instruments	95		4,923		(4,828		)	(98	)%
Bank loans	—		2,054		(2,054		)	(100	)%
RMBS	—		327		(327		)	(100	)%
Securitized borrowings	—		178		(178		)	(100	)%
Total interest expense	$	46,581	$	45,334	$	1,247		3	%

Three and Nine Months Ended September 30, 2016 as compared to Three and Nine Months Ended September 30, 2015

Aggregate interest expense decreased$2.2 million and increased $1.2 million to $14.1 million and $46.6 million for the three and nine months ended September 30, 2016 respectively as compared to $16.3 million and $45.3 million for the three and nine months ended September 30, 2015, respectively. We attribute the changes to the following:

Commercial real estate loans. Interest expense on commercial real estate loans increased$876,000 and $5.6 million to $8.1 million and $23.9 million for the three and nine months ended September 30, 2016, respectively. The increase was related to the increased borrowings from the consolidation of our securitization, RCC 2015-CRE4, which closed in August 2015 and, to a lesser extent, our securitization, RCC 2015-CRE3, that closed in February 2015. Current year interest expense also included a new financing facility to fund the production of new loans that was not included in the same period last year. These increases were partially offset by a decrease in interest expense due to the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1.

Middle market loans. Interest expense on middle market loans decreased$1.0 million and increased$2.5 million to $467,000 and $6.2 million for the three and nine months ended September 30, 2016, respectively, as compared to $1.5 million and $3.7 million for the three and nine months ended September 30, 2015, respectively. On August 4, 2016, we sold Northport TRS, LLC. As a result of the transaction, $2.6 million of amortization of the remaining deferred debt issuance costs related to the credit facility were accelerated and recorded as interest expense as of June 30, 2016.

Hedging Instruments. Interest expense on hedging instruments decreased$1.7 million and $4.8 million for the three and nine months ended September 30, 2016, respectively. The decrease is related to the deconsolidation of six hedge contracts in accordance with the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1 on January 1, 2016 and maturity of two hedge contracts during the first quarter of 2016.

Bank loans. Interest expense on bank loans decreased$452,000 and $2.1 million for the three and nine months ended September 30, 2016. The decrease is due to the deconsolidation of our remaining CLO, Apidos Cinco CDO, and, to a lesser extent, the liquidation of Apidos CDO III, Ltd. (“Apidos CDO III”) in June 2015.    

79

Revenue

The following table sets forth information relating to our non-interest revenue for the periods presented (in thousands):

	For the Three Months Ended
	September 30,
	2016			2015		Dollar Change			Percent Change
Revenue:
Gain (loss) on sale of residential mortgage loans	$	6,026		$	3,154	$	2,872		91	%
Dividend income	(188		)	17		(205		)	(1,206	)%
Fee income	2,023			781		1,242			159	%
Total revenue	$	7,861		$	3,952	$	3,909		99	%

	For the Nine Months Ended
	September 30,
	2016			2015		Dollar Change			Percent Change
Revenue:
Gain (loss) on sale of residential mortgage loans	$	15,607		$	11,594	$	4,013		35	%
Dividend income	(153		)	50		(203		)	(406	)%
Fee income	1,425			4,767		(3,342		)	(70	)%
Total revenue	$	16,879		$	16,411	$	468		3	%

Three and Nine Months Ended September 30, 2016 as compared to Three and Nine Months Ended September 30, 2015

Gain (loss) on sale of residential mortgage loans. Gain (loss) on sale of residential mortgage loans increased$2.9 million and $4.0 million for the three and nine months ended September 30, 2016, respectively. In October 2016, Primary Capital Mortgage, LLC ("PCM") reached an agreement to settle the litigation initiated by a third party in May 2014 related to the settlement of legacy repurchase claims.  In connection therewith, PCM recorded an additional $1.0 million of indemnifications during the three months ended September 30, 2016 to fully reserve the total settlement amount of $2.1 million as of September 30, 2016. In addition, there was an increase in secondary marketing income, where mortgage loans and servicing rights are sold between mortgage originators and investors, on our residential loan portfolio year over year.

Fee income. Fee income increased$1.2 million and decreased$3.3 million to $2.0 million and $1.4 million for the three and nine months ended September 30, 2016, respectively. These changes relate to recording a temporary impairment against income on our mortgage servicing rights portfolio of $800,000 and $5.6 million and its corresponding amortization for the three and nine months ended September 30, 2016 as compared to impairment on our mortgage servicing rights portfolio of $900,000 and $650,000 for the three and nine months ended September 30, 2015, respectively. A discounted cash flow approach is used to estimate the fair value of MSRs utilizing the valuation services of an independent third party. The key assumptions used in the estimation of the fair value of MSRs include prepayment speeds, discount rates, default rates, cost to service, contractual servicing fees and escrow earnings. In addition, there was a decrease in income resulting from the run-off of managed assets related to our investment in Resource Capital Asset Management, or RCAM, which holds management contracts that entitle us to collect senior, subordinated, and incentive fees related to RCAM's remaining CLO issuers that it manages.

80

Operating Expenses

The following table sets forth information relating to our operating expenses incurred for the periods presented (in thousands):

	For the Three Months Ended
	September 30,
	2016		2015			Dollar Change			Percent Change
Operating expenses:
Management fees - related party	$	3,053	$	3,252		$	(199	)	(6	)%
Equity compensation - related party	1,766		(225		)	1,991			885	%
Lease operating	1		(33		)	34			103	%
General and administrative	12,341		10,223			2,118			21	%
Depreciation and amortization	505		628			(123		)	(20	)%
Impairment losses	25,297		—			25,297			100	%
Provision (recovery) for loan and lease losses	7,683		1,034			6,649			643	%
Total operating expenses	$	50,646	$	14,879		$	35,767		240	%

	For the Nine Months Ended
	September 30,
	2016		2015		Dollar Change			Percent Change
Operating expenses:
Management fees − related party	$	10,189	$	10,312	$	(123	)	(1	)%
Equity compensation − related party	4,444		1,561		2,883			185	%
Rental operating expense	—		6		(6		)	(100	)%
Lease operating	5		14		(9		)	(64	)%
General and administrative	33,353		29,641		3,712			13	%
Depreciation and amortization	1,650		1,814		(164		)	(9	)%
Net impairment losses recognized in earnings	25,297		59		25,238			42,776	%
Provision (recovery) for loan losses	19,819		43,834		(24,015		)	(55	)%
Total operating expenses	$	94,757	$	87,241	$	7,516		9	%

Three and Nine Months Ended September 30, 2016 as compared to Three and Nine Months Ended September 30, 2015

Management fees − related party. Management fees-related party decreased$199,000 and $123,000 to $3.1 million and $10.2 million for the three and nine months ended September 30, 2016, respectively as compared to $3.3 million and $10.3 million for the three and nine months ended September 30, 2015, respectively. This expense represents compensation in the form of base management fees and incentive management fees pursuant to our management agreement as well as fees to the Manager of our structured note portfolio. The changes are described below:

• Base management fee is a monthly fee equal to 1/12th of the amount of our equity multiplied by 1.50%. Under the management agreement, "equity" is equal to the net proceeds from any issuance of shares of capital stock less offering related costs, plus or minus our retained earnings (excluding non-cash equity compensation incurred in current or prior periods) less any amounts we have paid for stock repurchases. The calculation is adjusted for one-time events due to changes in GAAP, as well as other non-cash charges upon approval of our independent directors. The base management fee decreased for the three and nine months ended September 30, 2016 as compared to the three and nine months ended September 30, 2015 due to decreased stockholders' equity, a component in the formula by which base management fees are calculated, primarily as a result of our repurchase of approximately 8.3% of our outstanding shares as part of our $50.0 million repurchase plan and quarterly dividend distributions in excess of earnings.

• Incentive management fees are based upon the excess of adjusted operating earnings, as defined in the management agreement, over a variable base rate. There were no fees paid for the three and nine months ended September 30, 2016 or three and nine months ended September 30, 2015.

• An oversight management fee is a quarterly fee paid to Resource America to reimburse it for additional costs incurred

81

related to our life care business, Long Term Care Conversion Funding, established for the purpose of acquiring life settlement contracts. The initial agreement, authorized in December 2012, provided for an annual fee of $550,000, with a two year term. In March 2015, the agreement was amended to extend the term for an additional two years terminating in December 2016. The oversight management fee was approximately $138,000 and $412,000 for the three and nine months ended September 30, 2016 and $139,000 and $411,000 for the three and nine months ended September 30, 2015.

Equity compensation - related party. Equity compensation - related party increased$2.0 million and $2.9 million to $1.8 million and $4.4 million for the three and nine months ended September 30, 2016, respectively as compared to income of $225,000 and expense of $1.6 million for the three and nine months ended September 30, 2015, respectively. These expenses relate to the amortization of annual grants of restricted common stock to our non-employee independent directors, and annual and discretionary grants of restricted stock to employees of Resource America who provide investment management services to us through our Manager as well as employees of our residential mortgage company subsidiary. This increase was primarily attributable to additional amortization of equity compensation in the amount of $896,000 related to the acceleration of shares granted to terminated executives at the close of the C-III merger. In addition, accelerated amortization of $555,000 of equity compensation expense was recorded at PCM in connection with an employment separation agreement during the first quarter of 2016. In addition, there was an increase in our stock price at September 30, 2016 compared to September 30, 2015, which directly impacts our quarterly measurement of compensation expense.

General and administrative expense. General and administrative expense increased$2.1 million and $3.7 million to $12.3 million and $33.4 million for the three and nine months ended September 30, 2016, respectively, as compared to $10.2 million and $29.6 million for the three and nine months ended September 30, 2015, respectively. The following table presents the allocation of general and administrative expenses between Corporate and PCM:

	For the Three Months Ended
	September 30,
	2016		2015		Dollar Change		Percent Change
General and administrative expenses:
Corporate	$	4,432	$	4,053	$	379	9	%
PCM	7,909		6,170		1,739		28	%
Total	$	12,341	$	10,223	$	2,118	21	%

	For the Nine Months Ended
	September 30,
	2016		2015		Dollar Change			Percent Change
General and administrative expenses:
Corporate	$	12,617	$	12,902	$	(285	)	(2	)%
PCM	20,736		16,739		3,997			24	%
Total	$	33,353	$	29,641	$	3,712		13	%

General and administrative expense - Corporate. General and administrative expense - Corporate increased$379,000 and decreased$285,000 to $4.4 million and $12.6 million for the three and nine months ended September 30, 2016, respectively, as compared to $4.1 million and $12.9 million for the three and nine months ended September 30, 2015. The increase in expenses for the three months ended September 30, 2016 is primarily attributable to legal expenses of approximately $216,000 related to the C-III transaction. The decrease in expenses for the nine months endedSeptember 30, 2016 is related to the deconsolidation of RCM Global, Pelium, Apidos Cinco CDO, and RREF CDO 2006-1 and RREF CDO 2007-1. Specific expenses are no longer recorded on an entity level basis for these entities. Prior to deconsolidation, each of the three CDOs recorded an average of $50,000 of general and administrative expenses each quarter and Pelium recorded approximately $75,000 each quarter. The decrease year over year was also related to a non-recurring expense of approximately $399,000 relating to a proposed restructuring which we determined not to pursue during the six months ended June 30, 2015. The decreases for the nine months ended September 30, 2016 were partially offset by legal expenses related to the closing of the Northport TRS, LLC sale transaction recorded during the second and third quarters of 2016.

82

General and administrative expense - PCM. General and administrative expense - PCM increased$1.7 million and $4.0 million to $7.9 million and $20.7 million for the three and nine months ended September 30, 2016, respectively, as compared to $6.2 million and $16.7 million for the three and nine months ended September 30, 2015, respectively. The increase is attributable to an increase in compensation costs and consulting fees to support PCM's continued geographic expansion as well as an increase in loan processing fees related to a rise in loan volume.

Depreciation and amortization. Depreciation and amortization decreased$123,000 and $164,000 to $505,000 and $1.7 million for the three and nine months ended September 30, 2016 respectively, as compared to $628,000 and $1.8 million for the three and nine months ended September 30, 2015, respectively. The decrease for the three and nine months ended September 30, 2016 was primarily due to an RCAM-managed CLO being called in January 2016 and, as a result, termination of amortization on the underlying intangible asset.    

Net impairment losses recognized in earnings. Net impairment losses recognized in earnings was $25.3 millionfor both the three and nine months ended September 30, 2016. This impairment is primarily related to other-than-temporary impairment recorded on our investment in RREF CDO 2007-1, which is now classified as investment securities available-for-sale. Third-party appraisers were recently engaged to perform appraisals on six of the seven remaining, legacy commercial real estate loans, which are part of the asset pool of RREF CDO 2007-1. As a result of having the properties supporting the loans appraised, two of the commercial real estate loans in the vehicle were determined to have cost bases in excess of their updated cash flows, as a result of the updated appraisals, causing a collective impairment charge to the cash flows of the vehicle of $20.7 million. In addition, impairment losses of $3.7 million, on a pre-tax basis, were recognized as a result of the reduction of the actual and expected revenue-earning useful lives of two RCAM managed CLOs: Shasta and San Gabriel. The Shasta CLO was called on October 20, 2016 and the San Gabriel CLO is expected to be called in the next three quarters.

Provision for loan and lease losses. Provision for loan and lease losses increased$6.6 million and decreased$24.0 million to $7.7 million and $19.8 million for the three and nine months ended September 30, 2016, respectively, as compared to $1.0 million and $43.8 million for the three and nine months ended September 30, 2015, respectively. The following table summarizes the information relating to our provision for loan losses for the periods presented (in thousands):

	For the Three Months Ended
	September 30,
	2016			2015			Dollar Change			Percent Change
CRE loan portfolio	$	7,997		$	(47	)	$	8,044		17,115	%
Bank loan portfolio	(435		)	178			(613		)	(344	)%
Middle market loan portfolio	121			903			(782		)	(87	)%
Total provision for loan and lease losses	$	7,683		$	1,034		$	6,649		643	%

	For the Nine Months Ended
	September 30,
	2016			2015			Dollar Change			Percent Change
CRE loan portfolio	$	7,997		$	38,025		$	(30,028	)	(79	)%
Bank loan portfolio	(358		)	1,912			(2,270		)	(119	)%
Middle market loan portfolio	12,180			4,223			7,957			188	%
Residential mortgage loans	—			(110		)	110			100	%
Loan receivable-related party	—			(216		)	216			100	%
Total provision for loan and lease losses	$	19,819		$	43,834		$	(24,015	)	(55	)%

CRE loan portfolio provision - The CRE loan portfolio provision increased by $8.0 million and decreased by $30.0 million for the three and nine months ended September 30, 2016. During the three months ended September 30, 2016, we recorded specific provisions of $6.1 million and $2.0 million, against two loans with amortized costs of $27.5 million and $2.0 million, respectively. As part of our ongoing monitoring, we obtained appraisals on six commercial real estate loans from third party vendors. Two of the loans were appraised and deemed to be valued below their previously stated cost basis. One loan, a hotel located in Studio City, CA, was previously under contract for sale that supported the value in excess of our loan amount. The contract for sale was dissolved in October 2016 and we utilized an updated appraisal as the determinant of value. The loan has a maturity date of February 2017 which triggered an appraisal on the ‘as-is’ basis to determine its current value resulting in a specific reserve of $6.1 million on the mezzanine tranches of the loan. The second loan, a hotel located in Tucson, AZ, was supported by a broker quote

83

received during the December 2015 audit review. After the property had a modification of terms with the operating manager an updated appraisal was requested which applied updated assumptions to the cash flow analysis of the property. The appraisal returned an ‘as-stabilized’ value below our cost basis and as a result, the mezzanine tranche of $2.0 million was fully reserved. The senior tranche of the loan is held in RREF CDO 2007-1. The provisions recorded against the loans reflect the estimated recoverable value. These and other assets in the loan pool continue to be monitored consistent with our impairment evaluation process. During the second quarter of 2015, we recorded an allowance for loan loss on a subordinated mezzanine loan position that was acquired in 2007. The outstanding loan balance of $38.1 million was fully reserved and associated accrued interest of $3.0 million was reversed against interest income, for a total charge to operations of $41.1 million. The loan was originally supported by a portfolio of 13 hotel properties, most of which were luxury brand hotels. As of June 2015, of the original 13 hotel properties securing the loan, three properties remained, all of which were located in or near San Juan, Puerto Rico. As a result of economic and credit disruptions in Puerto Rico, we determined that the loan was impaired and required a full reserve as of June 2015.

Bank loan portfolio provision - The bank loan provision decreased by $613,000 and $2.3 million for the three and nine months ended September 30, 2016, respectively. These decreases are due to the call and liquidation of Apidos CDO III in June 2015 and the deconsolidation of Apidos Cinco CDO on January 1, 2016. The recovery recorded in 2016 is due to receiving a cash payment on a position that was previously written-off at the time of liquidation.

Middle market loan portfolio provision - The middle market loan provision decreased by $782,000 and increased by $8.0 million for the three and nine months ended September 30, 2016, respectively. During the three months ended September 30, 2016, we recorded a provision of approximately $121,000, relating to an additional loss on the sale of Northport TRS, LLC. For the nine months ended, we recorded a provision of $12.2 million, of which $9.2 million related to the sale of Northport TRS, LLC, and $3.4 million related to the one direct origination loan we retained following the sale, offset by a $480,000 improvement in fair value mark on another position.

Other Income (Expense)

The following table sets forth information relating to our other income (expense) incurred for the periods presented (in thousands):

	For the Three Months Ended
	September 30,
	2016			2015			Dollar Change			Percent Change
Other Income (Expense):
Equity in earnings of unconsolidated subsidiaries	$	1,032		$	334		$	698		209	%
Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	(10,106		)	2,457			(12,563		)	(511	)%
Net realized and unrealized gain (loss) on investment securities, trading	(242		)	(580		)	338			58	%
(Loss) on reissuance/gain on extinguishment of debt	—			(332		)	332			100	%
(Loss) gain on sale of real estate	31			(19		)	50			263	%
Other income (expense)	1,500			—			1,500			100	%
Total other income (expense)	$	(7,785	)	$	1,860		$	(9,645	)	(519	)%

84

	For the Nine Months Ended
	September 30,
	2016			2015			Dollar Change			Percent Change
Other Income (Expense):
Equity in earnings of unconsolidated subsidiaries	$	5,950		$	1,702		$	4,248		250	%
Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	(7,817		)	16,612			(24,429		)	(147	)%
Net realized and unrealized gain (loss) on investment securities, trading	86			1,773			(1,687		)	(95	)%
Unrealized gain (loss) and net interest income on linked transactions, net	—			235			(235		)	(100	)%
(Loss) on reissuance/gain on extinguishment of debt	—			(1,403		)	1,403			100	%
(Loss) gain on sale of real estate	28			(19		)	47			247	%
Other income (expense)	1,500			—			1,500			100	%
Total other income (expense)	$	(253	)	$	18,900		$	(19,153	)	(101	)%

Three and Nine Months Ended September 30, 2016 as compared to Three and Nine Months Ended September 30, 2015

Equity in earnings of unconsolidated subsidiaries. Equity in earnings of unconsolidated subsidiaries increased$698,000 and $4.2 million to $1.0 million and $6.0 million for the three and nine months ended September 30, 2016 respectively, as compared to $334,000 and $1.7 million for the three and nine months ended September 30, 2015, respectively. An increase in earnings of approximately $485,000 and $2.6 million, respectively, was primarily related to two of our previously consolidated VIEs, RCM Global and Pelium, which are now accounted for as equity method investments due to a new amendment to the consolidation guidance which we adopted on January 1, 2016. We also recognized a gain from our equity investment in Pearlmark for the three and nine months ended September 30, 2016 of $132,000 and $551,000, respectively. We did not begin recognizing income from this investment until the fourth quarter of 2015. In addition, our investment in Leaf Commercial Capital realized a $1.4 million increase in income year over year due to increased lease originations.

Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans. Net realized and unrealized gain (loss) on investment securities available-for-sale and loans decreased$12.6 million and $24.4 million to a losses of $10.1 million and $7.8 million for the three and nine months ended September 30, 2016, respectively as compared to gains of $2.5 million and $16.6 million for the three and nine months ended September 30, 2015, respectively. These losses are primarily attributable to a $9.6 million loss recorded on one of the retained middle market direct origination loans that is included in loans held for sale as of September 30, 2016. This loan missed payment on its last two interest payments and the loan was marked down based on an external third party valuation. In addition, during 2015, we recognized increased gains related to the net gain on the sale and settlement of certain securities in the RCM Global portfolio, and the in-kind distribution and subsequent sale of those securities, net realized and unrealized gains on foreign exchange transactions from the settlement of contracts, and unrealized gains on interest rate lock commitments on our residential loan portfolio. We had no such gains during the three and nine months ended September 30, 2016. In addition, the RCM Global portfolio was deconsolidated effective January 1, 2016 and as a result our investment is now accounted for as an equity method investment.

Net realized and unrealized (loss) gain on investment securities, trading. Net realized and unrealized (loss) gain on investment securities, trading increased$338,000 and decreased $1.7 million to a loss of $242,000 and a gain of $86,000 during the three and nine months ended September 30, 2016, respectively, as compared to a loss of $580,000 and a gain of $1.8 million for the three and nine months ended September 30, 2015, respectively. The 2016 activity is related to the change in valuation of trading securities on our legacy portfolio. The 2015 activity was primarily related to unrealized and realized gains recognized on Pelium Capital which invested in structured securities classified as trading securities. The Pelium Capital portfolio was deconsolidated effective January 1, 2016 and is now accounted for as an equity method investment.

Loss on reissuance/gain on extinguishment of debt. Loss on reissuance/gain on extinguishment of debt was $332,000 and $1.4 million for the three and nine months ended September 30, 2015, respectively. There were no gains or losses for the three and nine months ended September 30, 2016. The transactions that give rise to the recognition of a loss on the reissuance of debt resulted from the reissuance of previously repurchased senior and junior notes in our consolidated VIEs in the open market. These senior and junior notes were originally repurchased at discounts to par and represented an opportunity to provide us strategic

85

financing at beneficial rates upon reissuance. At the date these notes were repurchased, a gain, representing the difference between the repurchase price and the par value of the note, was recognized. As the same notes are reissued at a price less than par, an unrealized loss equal to the difference between the reissued price and the par value of the note is recognized in current earnings.    

Other income (expense). Other income (expense) increased $1.5 million for both the three and nine months ended September 30, 2016. This income represents a consent fee paid to us by Resource America at the closing of the C-III merger on September 8, 2016 in exchange for the authorization and approval to waive our rights under the management agreement to terminate the agreement as a result of a change in control of our manager.

Financial Condition

Summary.

Our total assets were $2.2 billion at September 30, 2016 as compared to $2.8 billion at December 31, 2015.  The decrease in total assets was principally due to the adoption of the consolidation guidance on VIEs and the resulting deconsolidation of the following entities: RREF CDO 2006-1, RREF CDO 2007-1, Apidos Cinco CDO, Pelium Capital and RCM Global. In addition, we sold substantially all of our direct origination middle market loans and one syndicated loan with a par balance of $257.3 million with the sale of Northport TRS, LLC, which closed on August 4, 2016. In addition, Impairment losses taken on investment securities available-for-sale and intangible assets, provisions for loan loss, and the recognition of deferred tax asset valuation adjustments recorded during the three months ended September 30, 2016 also had a significant impact on the decrease of our assets.

Investment Portfolio.

The table below summarizes the amortized cost and net carrying amount of our investment portfolio, classified by asset type.  The following table includes both (i) the amortized cost of our investment portfolio and (ii) the net carrying amountof our investment portfolio for the period presented as follows (in thousands, except percentages):

	Amortized Cost		Net Carrying Amount		Percent of Portfolio		Weighted Average Coupon
As of September 30, 2016
Loans Held for Investment:
CRE whole loans(1)	$	1,361,183	$	1,351,761	69.92	%	5.54%
Middle market loans	51,539		51,539		2.67	%	8.57%
Residential mortgage loans(7)	3,292		3,281		0.17	%	4.15%
	1,416,014		1,406,581		72.76	%
Loans Held for Sale (4):
Middle market loans	7,182		7,182		0.37	%	10.24%
Residential mortgage loans	190,433		190,433		9.85	%	3.63%
	197,615		197,615		10.22	%
Investments in Available-for-Sale Securities:
CMBS - private placement	82,595		81,761		4.23	%	4.13%
RMBS	1,624		1,798		0.09	%	5.29%
ABS	149,320		153,146		7.92	%	N/A (3)
	233,539		236,705		12.24	%
Investment Securities-Trading:
Structured notes	5,914		3,747		0.19	%	N/A (3)
	5,914		3,747		0.19	%
Other (non-interest bearing):
Investment in unconsolidated entities	88,149		88,149		4.56	%	N/A(3)
Direct financing leases(8)	1,036		571		0.03	%	5.66%
	89,185		88,720		4.59	%
Total Investment Portfolio	$	1,942,267	$	1,933,368	100.00	%

86

	Amortized cost		Net Carrying Amount		Percent of portfolio		Weighted average coupon
As of December 31, 2015
Loans Held for Investment:
Commercial real estate loans (2):
Whole loans	$	1,630,801	$	1,627,056	64.02	%	5.09%
B notes	15,934		15,919		0.63	%	8.68%
Mezzanine loans	45,372		7,293		0.29	%	9.01%
Bank loans (5)	134,517		133,235		5.24	%	3.80%
Middle market loans (6)	379,452		375,513		14.78	%	9.72%
Residential mortgage loans(7)	1,746		1,735		0.07	%	4.44%
	2,207,822		2,160,751		85.03	%
Loans Held for Sale (4):
Bank loans	1,475		1,475		0.06	%	0.84%
Residential mortgage loans	94,471		94,471		3.72	%	3.92%
	95,946		95,946		3.78	%
Investments in Available-for-Sale Securities:
CMBS-private placement	158,584		159,424		6.27	%	5.21%
RMBS	2,156		2,190		0.08	%	4.87%
ABS	41,994		44,214		1.74	%	N/A (3)
Corporate Bonds	2,422		2,260		0.09	%	4.88%
	205,156		208,088		8.18	%
Investment Securities-Trading:
Structured notes	28,576		25,550		1.00	%	N/A (3)
RMBS	1,896		—		—	%	N/A (3)
	30,472		25,550		1.00	%
Other (non-interest bearing):
Investment in unconsolidated entities	50,030		50,030		1.97	%	N/A (3)
Direct financing leases(8)	1,396		931		0.04	%	5.66%
	51,426		50,961		2.01	%
Total Investment Portfolio	$	2,590,822	$	2,541,296	100.00	%

(1) Net carrying amount includes allowance for loan losses of $9.4 million at September 30, 2016.

(2) Net carrying amount includes allowance for loan losses of $41.8 million at December 31, 2015, allocated as follows: general allowance: B notes $15,000, mezzanine loans $38.1 million and whole loans $3.7 million.

(3) There is no stated rate associated with these securities.

(4) Loans held for sale are carried at the lower of cost or market. Amortized cost approximates fair value.

(5) Net carrying amount includes allowance for loan losses of $1.3 million at December 31, 2015.

(6) Net carrying amount includes allowance for loan losses of $3.9 million at December 31, 2015.

(7) Net carrying amount includes allowance for loan losses of $11,000 at September 30, 2016 and December 31, 2015.

(8) Net carrying amount includes allowance for lease losses of $465,000 at September 30, 2016 and December 31, 2015.

Commercial Mortgage-Backed Securities-Private Placement.  In the aggregate, we purchased our CMBS portfolio at a net premium to par value.  At September 30, 2016 and December 31, 2015, the remaining discount to be accreted into income over the remaining lives of the securities was $323,000 and $1.7 million, respectively. This decrease is primarily due to the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1 and the underlying collateral held at these entities. At September 30, 2016 and December 31, 2015, the remaining premium to be amortized into income over the remaining lives of the securities was $42,000 and $710,000, respectively. These securities are classified as available-for-sale and, as a result, are carried at their fair value.

During the three and nine months ended September 30, 2016, we recognized a $732,000 other-than-temporary impairment on one position that supported our CMBS investments bringing the fair value to $3.2 million.  An approval to sell and the current price yielded a value that was less than a full recovery of our cost basis.  The net impairment losses were recognized in earnings in our consolidated statements of operations. During the three and nine months ended September 30, 2015, we had no losses included in earnings due to other-than-temporary impairment.   

87

Securities classified as available-for-sale have decreased on a net basis as of September 30, 2016 as compared to December 31, 2015 primarily due to the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1 effective January 1, 2016, and to $25.0 million of paydowns during the period. We perform an on-going review of third-party reports and updated financial data on the underlying property financial information to analyze current and projected loan performance.  Rating agency downgrades are considered with respect to our income approach when determining other-than-temporary impairment and, when inputs are stressed, the resulting projected cash flows reflect a full recovery of principal.

The following table summarizes our CMBS-private placement at fair value (in thousands, except percentages):

	Fair Value at																Fair Value at
	December 31, 2015		CMBS included in Deconsolidated Entities effective January 1, 2016			Net Purchases		Upgrades/Downgrades			Paydowns			MTM Change Same Ratings			September 30, 2016
Moody's Ratings Category:
Aaa	$	22,414	$	(1,443	)	$	711	$	183		$	(7,946	)	$	41		$	13,960
Aa1 through Aa3	10,417		(10,255		)	—		(162		)	—			—			—
A1 through A3	7,650		(6,662		)	—		10			(998		)	—			—
Baa1 through Baa3	18,485		(13,262		)	—		4,926			(4,596		)	(36		)	5,517
Ba1 through Ba3	21,702		(7,003		)	—		22,464			(607		)	(486		)	36,070
B1 through B3	45,056		(12,149		)	3,240		(18,552		)	(8,861		)	(181		)	8,553
Caa1 through Caa3	2,013		(1,017		)	—		(996		)	—			—			—
Ca through C	559		(523		)	—		(16		)	—			—			20
Non-Rated	31,128		(3,462		)	—		(7,857		)	(2,011		)	(157		)	17,641
Total	$	159,424	$	(55,776	)	$	3,951	$	—		$	(25,019	)	$	(819	)	$	81,761
S&P Ratings Category:
AAA	$	4,039	$	—		$	—	$	8		$	(2,341	)	$	(11	)	$	1,695
AA+ through AA-	5,235		(5,235		)	—		—			—			—			—
A+ through A-	2		—			—		(2		)	—			—			—
BBB+ through BBB-	30,838		(17,114		)	—		4,887			(998		)	(80		)	17,533
BB+ through BB-	38,264		(12,077		)	—		12,386			(9,512		)	(383		)	28,678
B+ through B-	34,596		(4,972		)	3,240		(9,642		)	(1,500		)	(379		)	21,343
CCC+ through CCC-	6,759		(6,148		)	—		195			(607		)	1			200
D	50		(39		)	—		6			—			(17		)	—
Non-Rated	39,641		(10,191		)	711		(7,838		)	(10,061		)	50			12,312
Total	$	159,424	$	(55,776	)	$	3,951	$	—		$	(25,019	)	$	(819	)	$	81,761

Investment Securities, Trading.  The following table summarizes our structured notes and RMBS securities, which are classified as investment securities, trading, and are carried at fair value as follows (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
As of September 30, 2016:
Structured notes	$	5,914	$	419	$	(2,586	)	$	3,747
Total	$	5,914	$	419	$	(2,586	)	$	3,747
As of December 31, 2015:
Structured notes	$	28,576	$	1,674	$	(4,700	)	$	25,550
RMBS	1,896		—		(1,896		)	—
Total	$	30,472	$	1,674	$	(6,596	)	$	25,550

88

As a result of updated accounting guidance, effective January 1, 2016 we deconsolidated all of the assets of Pelium, which resulted in the removal of $21.9 million of investment securities, trading from our balance sheet, which is the primary cause of the decrease during the period. We sold no securities during the nine months ended September 30, 2016. We sold 19 securities during the nine months ended September 30, 2015, for a net realized gain of approximately $1.4 million. We held 6 and 56 investment securities, trading as of September 30, 2016 and December 31, 2015, respectively.

Real Estate Loans.  The following table is a summary of the loans in our commercial real estate loan portfolio (in thousands):

Description	Quantity	Amortized Cost		Contracted Interest Rates	Maturity Dates (3)
As of September 30, 2016:
Whole loans, floating rate(1) (3) (4) (5) (6) (7)	76	$	1,361,183	LIBOR plus 2.50% to LIBOR plus 6.45%	January 2017 to October 2019
Mezzanine loans (10)	1	—		N/A	September 2021
Total (2)(9)	77	$	1,361,183
As of December 31, 2015:
Whole loans, floating rate(1) (3) (4) (5) (6) (7)	87	$	1,630,801	LIBOR plus 1.75% to LIBOR plus 12.00%	February 2016 to February 2019
B notes, fixed rate	1	15,934		8.68%	April 2016
Mezzanine loans, fixed rate (8)	2	45,372		9.01%	September 2016
Total (2)	90	$	1,692,107

(1) Whole loans had $67.3 million and $112.6 million in unfunded loan commitments as of September 30, 2016 and December 31, 2015, respectively.  These unfunded commitments are advanced as the borrowers formally request additional funding as permitted under the loan agreement and any necessary approvals have been obtained.

(2) Totals do not include allowances for loan losses of $9.4 million and $41.8 million as of September 30, 2016 and December 31, 2015, respectively.

(3) Maturity dates do not include possible extension options that may be available to the borrowers.

(4) Includes two whole loans with a combined $11.2 million and $51.2 million senior component September 30, 2016 and December 31, 2015, respectively, that entered into modifications in 2016 and 2015 that resulted in a fixed rate of 0.50% as of September 30, 2016 and December 31, 2015, respectively (the difference of which was a result of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1 - see Note 2). The two loans were previously identified as troubled debt restructurings, or TDR's.

(5) Includes four whole loans with combined $4.5 million mezzanine components that have interest rates ranging from 1.50% to 5.20% as of September 30, 2016 and December 31, 2015.

(6) Includes a $799,000 junior mezzanine tranche of a whole loan that has a fixed rate of 10.00% as of September 30, 2016 and December 31, 2015.

(7) Contracted interest rates do not include a whole loan with an amortized cost of $2.0 million and $32.5 millionSeptember 30, 2016 and December 31, 2015, respectively, that entered into a modification in 2016 and 2015 which reduced the floating rate spread to 1.00% as of September 30, 2016 and December 31, 2015, respectively (the difference of which was a result of the deconsolidation of RREF CDO 2007-1 see Note 2). The loan was previously identified as a TDR.

(8) Contracted interest rates and maturity dates do not include rates or maturity dates associated with one loan with an amortized cost of $38.1 million that was fully reserved as of June 30, 2015.

(9) As a result of updated accounting guidance, effective January 1, 2016 (see Note 2), we deconsolidated all of the assets of RREF CDO 2006 and RREF CDO 2007, resulting in the removal of $271.8 million of loans, pledged as collateral.

(10) As a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, a mezzanine loan with a par value of $28.8 million was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero at September 30, 2016. The mezzanine loan is comprised of two tranches, with maturity dates of November 2016 and September 2021.

89

Bank Loans.  At September 30, 2016, we held no bank loans on our balance sheet as a result of the deconsolidation of Apidos Cinco on January 1, 2016. The following table summarizes our bank loan investments as of December 31, 2015 (in thousands):

	As of December 31, 2015
	Amortized cost		Fair Value (1)
Moody’s ratings category:
Baa1 through Baa3	$	9,715	$	9,693
Ba1 through Ba3	81,986		81,201
B1 through B3	37,103		35,916
Caa1 through Caa3	3,802		2,377
Ca through C	—		—
No rating provided	3,386		3,327
Total	$	135,992	$	132,514
S&P ratings category:
BBB+ through BBB-	$	20,805	$	20,769
BB+ through BB-	64,136		63,602
B+ through B-	44,315		41,896
CCC+ through CCC-	2,876		2,447
CC+ through CC-	—		—
C+ through C-	—		—
D	—		—
No rating provided	3,860		3,800
Total	$	135,992	$	132,514
Weighted average rating factor	1,701

(1)     The bank loan portfolio's fair value is determined using dealer quotes.

The following table provides information as to the lien position and status of our bank loans, at amortized cost (in thousands):

	Apidos I		Apidos Cinco		Total
As of December 31, 2015:
Loans held for investment:
First lien loans	$	—	$	131,281	$	131,281
Second lien loans	—		1,692		1,692
Third lien loans	—		—		—
Defaulted first lien loans	—		1,544		1,544
Defaulted second lien loans	—		—		—
Total	—		134,517		134,517
First lien loans held for sale at fair value	153		1,322		1,475
Total	$	153	$	135,839	$	135,992

90

Middle market loans.  At September 30, 2016, our middle market loan portfolio had loans held for investment with a carrying value of $51.5 million and loans held for sale with a fair value of $7.2 million. The aggregate fair value of middle market loans held decreased by $318.2 million over the fair value at December 31, 2015. This decrease was due to the sale of Northport TRS, LLC consisting of $257.3 million par amount of direct originated loans held by it as well as loans paying off as well as by reductions in new originations in the middle market platform prior to the sale of Northport TRS, LLC.

	As of September 30, 2016				As of December 31, 2015
	Amortized cost		Fair Value		Amortized cost		Fair Value
Moody’s ratings category:
Baa1 through Baa3	$	—	$	—	$	—	$	—
Ba1 through Ba3	—		—		—		—
B1 through B3	—		—		—		—
Caa1 through Caa3(1)	51,539		50,933		47,166		46,245
Ca	—		—		—		—
No rating provided(2)	7,182		7,182		332,286		330,061
Total	$	58,721	$	58,115	$	379,452	$	376,306
S&P ratings category:
BBB+ through BBB-	$	—	$	—	$	—	$	—
BB+ through BB-	—		—		—		—
B+ through B-	—		—		—		—
CCC+ through CCC-(1)	51,539		50,933		47,166		46,245
CC+ through CC-	—		—		—		—
C+ through C-	—		—		—		—
D	—		—		—		—
No rating provided(2)	7,182		7,182		332,286		330,061
Total	$	58,721	$	58,115	$	379,452	$	376,306
Weighted average rating factor	—				5,162

(1)     The middle market loan portfolio's fair value is determined using dealer quotes.

(2)     The middle market loan portfolio's fair value is determined using third party valuations and dealer quotes.

The following table provides information as to the lien position and status of middle market loans, at carrying value (in thousands):    

	As of September 30, 2016		As of December 31, 2015
First Lien	$	—	$	248,367
Second Lien	51,539		127,146
First lien loans held for sale at fair value	4,625		—
Second lien loans held for sale at fair value	2,557		—
Second Lien Defaulted	—		—
	$	58,721	$	375,513

Asset-backed Securities.  At September 30, 2016, we held a total of $153.1 million of ABS at fair value through RCC Real Estate, Resource TRS III, RCC Residential, Resource TRS and RCC Commercial II.  At December 31, 2015, we held a total of $44.2 million of ABS at fair value through Apidos Cinco CDO, RCM Global, ZAIS and RCC Commercial II.  The increase in total ABS was due to the reclassification of investments in deconsolidated entities RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO to asset-backed securities that occurred during the first quarter 2016.

91

The following table summarizes our ABS at fair value (in thousands):

	As of September 30, 2016				As of December 31, 2015
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Moody’s ratings category:
Aaa	$	—	$	—	$	3,701	$	3,976
Aa1 through Aa3	—		—		—		—
A1 through A3	310		305		—		—
Baa1 through Baa3	—		—		—		—
Ba1 through Ba3	—		—		377		347
B1 through B3	903		761		—		—
Caa1 through Caa3	86,032		86,033		—		—
Ca	1,144		1,659		—		—
No rating provided	60,931		64,388		37,916		39,891
Total	$	149,320	$	153,146	$	41,994	$	44,214
S&P ratings category:
AAA	$	—	$	—	$	3,681	$	3,956
AA+ through AA-	—		—		—		—
A+ through A-	—		—		—		—
BBB+ through BBB-	—		—		—		—
BB+ through BB-	—		—		377		347
B+ through B-	—		—		—		—
CCC+ through CCC-	1,144		1,659		—		—
No rating provided	148,176		151,487		37,936		39,911
Total	$	149,320	$	153,146	$	41,994	$	44,214
Weighted average rating factor	4,576				154

During the three and nine months ended September 30, 2016, we recognized $20.7 million of other-than-temporary impairment on our previously consolidated CRE CDO, RREF 2007-1, which is classified as an investment securities available-for-sale. Our security interest in the vehicle is supported by 12 CMBS securities and seven CRE loans. Third-party appraisals were obtained on six of the seven remaining legacy CRE loans, which are part of the asset pool of RREF CDO 2007-1. The remaining loan was under an agreement of sale. As a result of having the collateral properties appraised, two of the CRE loans in the vehicle were determined to have cost bases in excess of their expected cash flows, as a result of the updated appraisals, causing a collective impairment charge to the cash flows of the vehicle of $20.7 million. The impairment charge on the security reflects the credit impact to the fair value of the security given the results of the updated appraisal and reduces our cost basis in the security permanently. The impairment charge was calculated by comparing the previous projected cash flows of the security to the revised cash flows including the results of the updated appraisals.

Corporate bonds. At September 30, 2016, we held no corporate bonds on our balance sheet as a result of the deconsolidation of Apidos Cinco CDO on January 1, 2016.  At December 31, 2015, Apidos Cinco CDO, held a total of $2.3 million of corporate bonds at fair value, which secure the debt issued by this entity.  We recorded the bonds at fair value, with any unrealized gain or loss reported in the stockholder’s equity section of the balance sheet.

92

The following table summarizes our corporate bonds at fair value (in thousands):

	December 31, 2015
	Amortized Cost		Fair Value
Moody’s ratings category:
B1 through B3	$	868	$	868
Ca	1,471		1,327
Caa1 through Caa3	83		65
No rating provided	—		—
Total	$	2,422	$	2,260
S&P ratings category:
B+ through B-	$	868	$	868
CCC+ through CCC-	1,554		1,392
D	—		—
Total	$	2,422	$	2,260
Weighted average rating factor	7,512

Investment in Unconsolidated Entities. The following table shows our investments in unconsolidated entities as of September 30, 2016 and December 31, 2015, and equity in earnings of unconsolidated entities for the three and nine months ended September 30, 2016 and three and nine months ended September 30, 2015 (in thousands):

						Equity in Earnings of Unconsolidated subsidiaries
		Balance as of		Balance as of		For the three months ended			For the nine months ended			For the three months ended			For the nine months ended
	Ownership %	September 30, 2016		December 31, 2015		September 30, 2016			September 30, 2016			September 30, 2015			September 30, 2015
RRE VIP Borrower, LLC (1)	—%	$	—	$	—	$	—		$	35		$	—		$	46
Investment in LCC Preferred Stock	29.0%	44,777		42,017		415			2,759			961			1,362
Investment in CVC Global Credit Opportunities Fund (2)	—%	—		—		—			—			(628		)	293
Pearlmark Mezzanine Realty Partners IV, L.P.(3)	47.7%	16,751		6,465		132			552			—			—
RCM Global, LLC(4)	28.6%	306		—		(560		)	(160		)	—			—
Pelium Capital Partners, L.P. (4)	80.2%	24,767		—		1,045			2,765			—			—
Investment in School Lane House (5)		—		—		—			(1		)	1			1
Subtotal		86,601		48,482		1,032			5,950			334			1,702
Investment in RCT I and II (6)	3.0%	1,548		1,548		(636		)	(1,928		)	(610		)	(1,805		)
Total		$	88,149	$	50,030	$	396		$	4,022		$	(276	)	$	(103	)

(1) The investment in RRE VIP Borrower was sold as of December 31, 2014. Earnings for the three and nine months ended September 30, 2016 and 2015 are related toinsurance premium and property tax refunds and the liquidation of bank accounts with respect to the underlying sold properties of the portfolio.

(2) In December 2015, we elected a full redemption of its remaining investment in the fund.

(3) We committed to invest up to $50.0 million in Pearlmark Mezzanine Realty Partners IV, L.P. The commitment termination date ends the earlier of when the original commitment is fully funded, or the fifth anniversary following the final closing date of June 24, 2015.

(4) Pursuant to the new consolidation guidance adopted January 1, 2016, these previously consolidated VIEs are now accounted for under the equity method.

(5) Investment in School Lane House was sold as of December 31, 2014. Earnings for the three and nine months ended September 30, 2016 and 2015 related to the return of a security deposit and payment of an insurance claim.

(6) For the three and nine months ended September 30, 2016 and 2015, these amounts are recorded in interest expense on our consolidated statements of operations.

93

Financing Receivables

The following tables show the allowance for loan and lease losses and recorded investments in loans and leases as of the dates indicated (in thousands):

	Commercial Real Estate Loans			Bank Loans			Middle Market Loans			Residential Mortgage Loans			Direct Financing Leases		Total
As of September 30, 2016:
Allowance for Loan and Leases Losses:
Allowance for losses at January 1, 2016	$	41,839		$	1,282		$	3,939		$	11		$	465	$	47,536
Provision (recovery) for loan and lease losses	7,997			(358		)	12,180			—			—		19,819
Loans charged-off	—			358			(16,119		)	—			—		(15,761		)
Deconsolidation of VIEs	(40,414		)	(1,282		)	—			—			—		(41,696		)
Allowance for losses at September 30, 2016	$	9,422		$	—		$	—		$	11		$	465	$	9,898
Ending balance:
Individually evaluated for impairment	$	8,059		$	—		$	—		$	—		$	465	$	8,524
Collectively evaluated for impairment	$	1,363		$	—		$	—		$	11		$	—	$	1,374
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
Loans and Leases:
Ending balance:
Individually evaluated for impairment	$	38,133		$	—		$	51,539		$	—		$	1,036	$	90,708
Collectively evaluated for impairment	$	1,323,050		$	—		$	—		$	3,292		$	—	$	1,326,342
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
As of December 31, 2015:
Allowance for Loan and Lease Losses:
Allowance for losses at January 1, 2015	$	4,043		$	570		$	—		$	—		$	—	$	4,613
Provision for loan and lease losses	37,735			2,887			8,901			(99		)	465		49,889
Loans charged-off	—			(2,175		)	(4,962		)	110			—		(7,027		)
Recoveries	61			—			—			—			—		61
Allowance for losses at December 31, 2015	$	41,839		$	1,282		$	3,939		$	11		$	465	$	47,536
Ending balance:
Individually evaluated for impairment	$	40,274		$	1,282		$	—		$	—		$	465	$	42,021
Collectively evaluated for impairment	$	1,565		$	—		$	3,939		$	11		$	—	$	5,515
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
Loans and Leases:
Ending balance:
Individually evaluated for impairment	$	169,707		$	1,544		$	—		$	—		$	1,396	$	172,647
Collectively evaluated for impairment	$	1,522,400		$	132,973		$	379,452		$	1,746		$	—	$	2,036,571
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—

94

Credit quality indicators

Commercial Real Estate Loans

Loans are graded at inception and updates to assigned grades are made continually as new information is received, as such, a loan previously rated 4 may, over time and with improved performance, be rated better than 4. Loans are graded on a scale of 1 to 4 with 1 representing our highest rating and 4 representing our lowest rating. Commercial real estate loans are first individually evaluated for impairment. To the extent no individual impairment is determined, a general reserve is established.

The characteristics of each rating category are as follows:

1. A loan with a rating of a 1 is considered to have satisfactory performance with no issues noted. All interest and principal payments are current and the probability of loss is remote;

2. A loan is graded with a rating of a 2 if a surveillance trigger event has occurred, but loss is not probable at this time. Such trigger events could include but are not limited to a trending decrease in occupancy rates or a flattening of lease revenues; and to a lesser extent, ground lease defaults, ground lease expirations that occur in the next six months or the borrower is delinquent on payment of property taxes or insurance.;

3. A loan with a rating of 3 has experienced an extended decline in operating performance, a significant deviation from its origination plan or the occurrence of one or more surveillance trigger events which create an increased risk for potential default. Loans identified in this category show some liquidity concerns. However, the risk of loss is not specifically assignable to any individual loan. The noted risk of the loans in this category is generally covered by general reserves;

4. A loan with a rating of a 4 is considered to be in payment default or default is expected, full recovery of the unpaid principal balance is improbable and loss is considered probable. The noted risk of the loans in this category is covered by specific reserves.

Credit risk profiles of commercial real estate loans were as follows (in thousands):

	Rating 1 (2)		Rating 2		Rating 3		Rating 4 (3)		Held for Sale		Total
As of September 30, 2016:
CRE whole loans	$	1,232,641	$	99,083	$	—	$	29,459	$	—	$	1,361,183
Mezzanine loans (1)	—		—		—		—		—		—
	$	1,232,641	$	99,083	$	—	$	29,459	$	—	$	1,361,183
As of December 31, 2015:
CRE whole loans	$	1,596,099	$	32,500	$	—	$	2,202	$	—	$	1,630,801
B notes	15,934		—		—		—		—		15,934
Mezzanine loans	7,300		—		—		38,072		—		45,372
	$	1,619,333	$	32,500	$	—	$	40,274	$	—	$	1,692,107

(1) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF 2006-1.

(2) Includes four loans which were impaired as of December 31, 2015.

(3) Includes three loans which were impaired as of September 30, 2016.

As part of our ongoing loan monitoring, third-party appraisal services were obtained on six legacy CRE loans during the quarter ended September 30, 2016. As a result of the evaluation of those appraisals, it was determined that two loans previously disclosed as impaired loans, one in Studio City, CA with an amortized cost of $27.5 million and the other in Tucson, AZ with an amortized cost of $2.0 million, had cost bases in excess of their appraised values. As such, for the three and nine months ended September 30, 2016, we recorded specific provisions of $6.1 million on the Studio City, CA loan and $2.0 million on the Tucson, AZ loan. Previously, the Studio City, CA loan was under contract for sale at a value in excess of our loan amount. The contract for sale was terminated in October 2016. The Tucson, AZ loan was previously supported by a broker’s opinion of value received as of December 31, 2015. The updated appraisal, after factoring in modified terms with the operating manager, and adjustments to projected occupancy and the average daily rate, returned a fair value below our cost basis, resulting in the full impairment of the portion of this whole loan held directly on balance sheet. A portion of this whole loan is also held in RREF CDO 2007-1. The provisions recorded against these loans reflect the estimated recoverable value. These and other assets in the loan pool continue to be monitored consistent with our impairment evaluation process.

95

We also had six loans classified as rating 2 due to surveillance triggers being registered. Of the six loans, several will be classified as loans held for sale as of December 31, 2016. The other two loans had surveillance trigger events due to a mechanics lien and a code violation. These two loans were not considered impaired at September 30, 2016.

All of our commercial real estate loans were current with exception of one mezzanine loan that had defaulted as of September 30, 2016 and December 31, 2015. This loan was deconsolidated as part of our adoption of amendments to consolidation accounting guidance as required on January 1, 2016. However, as a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, par value of $28.8 million of this mezzanine loan was acquired as part of the liquidation proceeds and is reflected on our balance sheet at a fair value of zero at September 30, 2016.

Bank Loans

Loans are graded at inception and updates to assigned grades are made continually as new information is received. Loans are graded on a scale of 1 to 5 with 1 representing our highest rating and 5 representing our lowest rating. Bank loans are first individually evaluated for impairment. To the extent no individual impairment is determined, a general reserve is established.

The characteristics of each rating category are as follows:

1. Loans with a rating of 1 are considered performing within expectations. All interest and principal payments are current, all future payments are anticipated and loss is not probable;

2. Loans with a rating of a 2 are considered to have limited liquidity concerns and are watched closely. Loans identified in this category show remote signs of liquidity concerns, loss is not probable and therefore no reserve is established;

3. Loans with a rating of a 3 are considered to have possible future liquidity concerns. Loans identified in this category show some liquidity concerns, but the ability to estimate potential defaults is not quantifiable and therefore no reserve is established;

4. Loans with a rating of a 4 are considered to have nearer term liquidity concerns. These loans have a reasonable possibility of future default. However, the risk of loss is not assignable to one specific credit. The noted risk of the loans in this category is covered by general reserves; and

5. Loans with a rating of a 5 have defaulted in payment of principal and interest or default is imminent. It is probable that impairment has occurred on these loans based on their payment status and that impairment is estimable. The noted risk of the loans in this category is covered by specific reserves.

Credit risk profiles of bank loans were as follows (in thousands):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Held for Sale		Total
As of December 31, 2015:
Bank loans	$	113,897	$	17,578	$	1,498	$	—	$	1,544	$	1,475	$	135,992

As of September 30, 2016 all of our bank loans were deconsolidated. As of December 31, 2015, all of our bank loans were current with respect to debt service with the exception of one loan with an aggregate amortized cost of $1.5 million, on which there was a reserve.

96

Middle Market Loans

At inception, all middle market loans are graded at a 2. Updates to assigned grades are made continually as new information is received. Loans are graded on a scale of 1 to 5 with 1 representing our highest rating and 5 representing our lowest rating. Middle market loans are only evaluated individually for impairment.

The characteristics of each rating category are as follows:

1. A loan with a rating of a 1 is considered performing above expectations and the likelihood of loss is remote;

2. A loan with a rating of a 2 is considered performing within expectations and the likelihood of loss is remote;

3. A loan with a rating of a 3 is considered performing below expectations and requires close monitoring but no loss of interest or principal is expected. Loans receiving this rating may be out of compliance with financial covenants; however, these loans are current with respect to interest and principal;

4. A loan with a rating of a 4 is considered performing below expectations and some loss of interest or dividend is expected but no loss of principal. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due, but generally not more than 180 days past due; and

5. A loan with a rating of a 5 is considered performing substantially below expectations, in default and some loss of principal is expected. The borrower is out of compliance with most or all of the debt covenants and payments are substantially delinquent.

Credit risk profiles of middle market loans were as follows (in thousands):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Held for Sale		Total
As of September 30, 2016:
Middle market loans	$	—	$	40,048	$	11,491	$	—	$	—	$	7,182	$	58,721
As of December 31, 2015:
Middle market loans	$	44,252	$	305,578	$	29,622	$	—	$	—	$	—	$	379,452

As of September 30, 2016, all of our syndicated loans were performing and one remaining directly originated loan classified as held for sale was in default. The Company recorded an additional unrealized loss on this loan of $9.6 million, included in the net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives line item on the consolidated statement of operations, representing the lower of the loan's cost or fair value based on an updated third party valuation as of September 30, 2016. The rest of the Company's portfolio is current with respect to debt service.  All of the Company’s middle market loans were current with respect to debt service as of December 31, 2015.

Residential Mortgage Loans

Residential mortgage loans are reviewed periodically for collectability in light of historical experience, the nature and amount of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing underlying conditions.

Direct Financing Leases

During the year ended December 31, 2015, we recorded a provision against the value of our direct financing leases in the amount of $465,000. As of September 30, 2016, we held $571,000 of direct financing leases, net of reserves.

97

Loan Portfolios Aging Analysis

The following table presents the loan and lease portfolio aging analysis as of the dates indicated at cost basis (in thousands):

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
As of September 30, 2016:
CRE whole loans	$	—	$	—	$	—	$	—	$	1,361,183	$	1,361,183	$	—
Mezzanine loans (3)	—		—		—		—		—		—		—
Middle market loans (4)	—		4,625		—		4,625		54,096		58,721		—
Direct Financing Leases	5		—		—		5		1,031		1,036		—
Residential mortgage loans (1)	—		—		129		129		193,597		193,726		—
Total loans	$	5	$	4,625	$	129	$	4,759	$	1,609,907	$	1,614,666	$	—
As of December 31, 2015:
CRE whole loans (2)	$	—	$	—	$	—	$	—	$	1,630,801	$	1,630,801	$	—
B notes	—		—		—		—		15,934		15,934		—
Mezzanine loans	—		38,072		—		38,072		7,300		45,372		—
Bank loans	1,544		—		—		1,544		132,973		134,517		—
Middle Market	—		—		—		—		379,452		379,452		—
Direct Financing Leases	12		214		—		226		1,170		1,396		—
Residential mortgage loans (1)	27		41		80		148		96,069		96,217		—
Total loans	$	1,583	$	38,327	$	80	$	39,990	$	2,263,699	$	2,303,689	$	—

(1) Contains $190.4 million and $94.5 million of residential mortgage loans held for sale at fair value September 30, 2016 and December 31, 2015, respectively.

(2) Current loans include one impaired whole loan with an amortized costs of $2.2 million, which was reserved as of December 31, 2015.

(3) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at fair value of zero as a result of the liquidation of RREF 2006-1.

(4) Contains one middle market loan held for sale at fair value of $4.6 million at September 30, 2016.

98

Impaired Loans

The following tables show impaired loans as of the dates indicated (in thousands):

	Recorded Balance (1)		Unpaid Principal Balance		Specific Allowance			Average Investment in Impaired Loans		Interest Income Recognized
As of September 30, 2016:
Loans without a specific valuation allowance:
CRE whole loans	$	8,674	$	8,674	$	—		$	8,674	$	434
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Loans with a specific valuation allowance:
CRE whole loans	$	29,459	$	29,459	$	(8,059	)	$	29,459	$	65
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Bank loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Total:
CRE whole loans	$	38,133	$	38,133	$	(8,059	)	$	38,133	$	499
Mezzanine loans	—		—		—			—		—
Middle market loans	—		—		—			—		—
Residential mortgage loans	—		—		—			—		—
	$	38,133	$	38,133	$	(8,059	)	$	38,133	$	499
As of December 31, 2015:
Loans without a specific valuation allowance:
CRE whole loans	$	129,433	$	129,433	$	—		$	128,591	$	3,939
B notes	$	—	$	—	$	—		$	—	$	—
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Bank loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Loans with a specific valuation allowance:
CRE whole loans	$	2,202	$	2,202	$	(2,202	)	$	2,202	$	63
B notes	$	—	$	—	$	—		$	—	$	—
Mezzanine loans	$	38,072	$	38,072	$	(38,072	)	$	38,072	$	(2,879	)
Bank loans	$	1,544	$	1,551	$	(1,282	)	$	1,544	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Total:
CRE whole loans	$	131,635	$	131,635	$	(2,202	)	$	130,793	$	4,002
B notes	—		—		—			—		—
Mezzanine loans	38,072		38,072		(38,072		)	38,072		(2,879		)
Bank loans	1,544		1,551		(1,282		)	1,544		—
Middle market loans	—		—		—			—		—
Residential mortgage loans	—		—		—			—		—
	$	171,251	$	171,258	$	(41,556	)	$	170,409	$	1,123

(1) As a result of the adoption of new consolidation accounting guidance as required on January 1, 2016, we deconsolidated $91.3 million of senior participations in four loans that were previously classified as impaired loans in our consolidated financial statements as of December 31, 2015.

99

Troubled-Debt Restructurings

The following tables show troubled-debt restructurings in our loan portfolio (in thousands):

	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
For the Nine Months Ended September 30, 2016:
CRE whole loans	3	$	29,459	$	21,400
Mezzanine loans	—	—		—
Middle market loans	—	—		—
Residential mortgage loans	—	—		—
Total loans	3	$	29,459	$	21,400
	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
For the Nine Months Ended September 30, 2015:
CRE whole loans	3	$	99,959	$	99,959
B notes	—	—		—
Mezzanine loans	1	38,072		—
Bank loans	—	—		—
Middle market loans	—	—		—
Residential mortgage loans	—	—		—
Total loans	4	$	138,031	$	99,959

As of September 30, 2016 and 2015, there were no commercial real estate loan troubled-debt restructurings that subsequently defaulted.

Restricted Cash

At September 30, 2016, we had restricted cash of $5.7 million, which consisted of $5.5 million of restricted cash held by six securitizations, $30,000 held as margin and $197,000 held in various reserve accounts. At December 31, 2015, we had restricted cash of $40.6 million, which consisted of $39.0 million of restricted cash in our eight securitizations, $1.4 million held as margin and $195,000 held in various reserve accounts. The decrease of $34.9 million is primarily related to the deconsolidation of Apidos Cinco CDO, which had $16.7 million in restricted cash and also a reduction of $17.7 million of restricted cash in our CRE securitizations used to fund our future funding commitments as well as the return of a margin posting of $500,000.

100

Interest Receivable

The following table summarizes our interest receivable as of the periods indicated (in thousands):

	September 30, 2016		December 31, 2015		Net Change
Interest receivable from loans	$	6,077	$	10,322	$	(4,245	)
Interest receivable from securities	540		2,510		(1,970		)
Interest receivable other	—		1,171		(1,171		)
Interest receivable from escrow and sweep accounts	6		6		—
Total	$	6,623	$	14,009	$	(7,386	)

At September 30, 2016, we had interest receivable of $6.6 million, which primarily consisted of interest on our loans and securities and $6,000 of interest earned on escrow and sweep accounts. At December 31, 2015, we had interest receivable of $14.0 million, which primarily consisted of interest on our loans, securities and an equity investment in a warehouse facility and $6,000 of interest earned on escrow and sweep account. The $7.4 million decrease was primarily attributable to the deconsolidation of Pelium Capital, Apidos Cinco CDO, RREF CDO 2006-1 and RREF CDO 2007-1. As a result of the new accounting guidance, all of the assets of these four entities were deconsolidated on January 1, 2016. The sale of Northport TRS, LLC in August 2016 also resulted in a reduction of interest receivable of approximately $2.1 million. Additionally, there was a decrease in interest receivable of $1.2 million related to the closing of ZAIS, our syndicated bank loans warehouse, in May 2016.

Deferred Tax Assets

Deferred tax assets, net, decreased$7.0 million to $5.6 million as of September 30, 2016 from $12.6 million as of December 31, 2015. The future realization of deferred tax assets depends upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to changes in management's focus regarding the non-CRE businesses, forecasted taxable income as of September 30, 2016 versus June 30, 2016 decreased; therefore, management believes it is more likely than not that the benefit from these deferred tax assets will not be completely realized. In recognition of this risk, we have provided a valuation allowance of $16.3 million on deferred tax assets as of September 30, 2016. We will continue to evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing forecasted taxable income using both historical and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry back years (if permitted) and the availability of tax planning strategies. The net income tax expense recorded during the quarter ended September 30, 2016 was $12.3 million which consists of $4.0 million of tax benefits attributable to operating loss incurred during the quarter and a $16.3 million valuation allowance.

Prepaid Expenses

The following table summarizes our prepaid expenses at the periods indicated (in thousands):

	September 30, 2016		December 31, 2015		Net Change
Prepaid taxes	$	2,653	$	1,598	$	1,055
Prepaid insurance	415		224		191
Other prepaid expenses	1,547		1,358		189
Total	$	4,615	$	3,180	$	1,435

Prepaid expenses increased $1.4 million to $4.6 million as of September 30, 2016 from $3.2 million as of December 31, 2015. The primary cause was an increase in prepaid taxes of $1.1 million due to the payment of estimated taxes during the three months ended September 30, 2016. Additionally, prepaid insurance increased $191,000 due to the timing of payments on the annual renewal of our director's and officer's insurance policy and an increase in other prepaid expenses of $189,000.

101

Other Assets

The following table summarizes our other assets as of the periods indicated (in thousands):

	September 30, 2016		December 31, 2015		Net Change
Other receivables	$	1,972	$	12,578	$	(10,606	)
Investment in life settlement contracts	5,935		4,584		1,351
Tax receivable	891		482		409
Management fees receivable	783		1,904		(1,121		)
Fixed assets - non real estate	2,536		2,488		48
Other assets	399		259		140
Total	$	12,516	$	22,295	$	(9,779	)

The decrease of approximately $9.8 million in other assets is primarily due to a decrease in other receivables of $10.6 million; $8.6 million of this amount relates to the cash received as a return of principal from our investment in CVC Credit Opportunities Fund, L.P., $850,000 of this amount relates to a receivable accrued in December 2015 for a cash distribution from RCC 2015-CRE3; and $400,000 relates to a decrease in the amount of a loan receivable due from LCF to fund new life settlement contracts, partially offset by other miscellaneous receivables. Additionally, there was a decrease in management fees receivable of $1.1 million due to an incentive management fee earned on RCAM in December 2015 and paid in January 2016. These decreases were offset by an increase of $1.4 million in life settlement contracts from the net acquisition of new contracts, an increase in$409,000 of tax receivable due to the timing of tax payments made, and an increase of $48,000 due to the acquisition of fixed assets at PCM.

102

Repurchase and Credit Facilities

Borrowings under our repurchase agreement facilities were guaranteed by us or one of our subsidiaries. The following table sets forth certain information with respect to our borrowings as of the periods indicated (dollars in thousands):

	September 30, 2016						December 31, 2015
	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral	Weighted Average Interest Rate	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral	Weighted Average Interest Rate
CMBS Term Repurchase Facilities
Wells Fargo Bank (1)	$	18,608	$	24,008	15	1.82%	$	25,656	$	31,650	21	1.57%
Deutsche Bank (2)	59,174		89,523		20	2.93%	—		—		—	—%
CRE Term Repurchase Facilities
Wells Fargo Bank (3)	194,903		286,199		14	2.66%	123,937		179,169		9	2.39%
Morgan Stanley Bank (4)	140,066		205,561		12	3.15%	98,991		142,098		7	2.96%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015 (5)	26,341		89,181		1	6.03%	26,244		89,181		1	5.85%
Short-Term Repurchase Agreements - CMBS
Wells Fargo Securities, LLC	—		—		—	—%	13,548		19,829		3	1.93%
Deutsche Bank Securities, LLC	—		—		—	—%	43,859		59,518		17	2.10%
Residential Investments Term Repurchase Facility
Wells Fargo Bank	—		—		—	—%	782		835		1	2.75%
Residential Mortgage Financing Agreements
New Century Bank	37,775		48,359		163	3.50%	43,789		61,111		199	3.17%
Wells Fargo Bank	136,867		199,436		457	3.31%	42,030		59,841		166	3.03%
Totals	$	613,734	$	942,267			$	418,836	$	643,232

(1) The Wells Fargo Bank CMBS term repurchase facility borrowing includes $3,000 and $2,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(2) The Deutsche Bank CMBS term repurchase facility includes $26,000 and $0 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(3) The Wells Fargo Bank CRE term repurchase facility borrowing includes $1.8 million and $675,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(4) The Morgan Stanley Bank CRE term repurchase facility includes $1.3 million and $1.7 million of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(5) The RSO Repo SPE Trust 2015 term repurchase facility includes $320,000 and $415,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

We obtained three waivers of the EBITDA to fixed charge coverage ratio covenants for our CRE repurchase facilities and Wells Fargo CMBS repurchase facility as of September 30, 2016. We continuously monitor our compliance with all of the financial covenants. We are in compliance with all other financial covenants as defined in the respective agreements as of September 30, 2016.    

Residential Investments – Term Repurchase Facility

In June 2014, our wholly-owned subsidiaries, RCC Resi Portfolio, RCC Resi TRS, and RCC Resi Depositor (the “Sellers”) entered into a master repurchase and securities contract (the “2014 Facility”) with Wells Fargo Bank, NA ("Wells Fargo").  Under the 2014 Facility, from time to time, the parties may enter into transactions in which the Sellers and Wells Fargo agree to transfer from the Sellers to Wells Fargo all of their right, title and interest to certain residential mortgage backed securities and other assets against the transfer of funds by Wells Fargo to the Sellers, with a simultaneous agreement by Wells Fargo to transfer back to the

103

Sellers such assets at a date certain or on demand, against the transfer of funds from the Sellers to Wells Fargo. In July 2016, we elected to terminate the 2014 Facility.

CRE - Term Repurchase Facilities

On February 27, 2012, our wholly-owned subsidiary, RCC Real Estate SPE 4 LLC ("SPE 4"), entered into a master repurchase and securities agreement (the "2012 Facility") with Wells Fargo to finance the origination of commercial real estate loans. In July 2016 in exchange for applicable structuring and extension fees, we entered into a fifth amendment of the 2012 Facility which extended the current term to July 2018 with three additional one year extension options exercisable at our option.

Residential Mortgage Financing Agreements

In February 2011, PCM entered into a master repurchase agreement (the "New Century Facility") with New Century Bank d/b/a Customer's Bank ("New Century") to finance the acquisition of residential mortgage loans. In August 2016, PCM entered into a tenth amendment of the New Century Facility which extended the facility through December 2016 and reduced the maximum borrowing amount from $65.0 million to $50.0 million through October 2016 then to $35.0 million through November 2016 and finally to $25.0 million through December 2016. The New Century Facility's tenth amendment increases the interest margins following the October 2016 maximum amount reduction. New Century's compliance with purchase requests will no longer be required effective November 2016. No other material changes were made to the New Century Facility's terms.

In July 2014, PCM entered into a master repurchase agreement (the "Wells Fargo Facility") with Wells Fargo to finance the acquisition of residential mortgage loans. In May 2016, PCM amended its agreement with Wells Fargo to increase the maximum of the amount of the Wells Fargo Facility from $100.0 million to $115.0 million for the period from May 2016 to June 2016. In June 2016, PCM amended its agreement with Wells Fargo to increase the maximum of the amount of the Wells Fargo Facility from $115.0 million to $150.0 million. In August 2016, PCM entered into a seventh amendment of the Wells Fargo Facility to extend the facility to November 2016. No other material changes were made to the Wells Fargo Facility's terms.

Securitizations

As of September 30, 2016, we had executed eight and currently retain equity in eight of these securitizations. Pertinent information about our securitizations that occurred during the first nine months of 2016 is as follows:

• On January 1, 2016, we deconsolidated RREF CDO 2006-1, RREF CDO 2007-1, and Apidos Cinco CDO in accordance with guidance on consolidation. On September 28, 2016, Apidos Cinco CDO’s trustee issued a notice to call the notes issued by the CDO.

• On April 25, 2016, we called RREF CDO 2006-1 and in exchange for our equity notes and preference share, received the remaining collateral.

Senior Secured Revolving Credit Agreement

On August 4, 2016, we sold Northport TRS, LLC to CVC Credit Partners, an affiliated party, and to other third parties.  This transaction included the assumption of the senior secured revolving credit agreement by the purchasers.

Equity

Total equity at September 30, 2016 was $718.6 million and gave effect to $42,000 of unrealized losses on our cash flow hedges and $7.0 million of net unrealized gains on our available-for-sale portfolio, shown as a component of accumulated other comprehensive income.  Equity at December 31, 2015 was $826.8 million and gave effect to $131,000 of unrealized losses on our cash flow hedges and $835,000 of net unrealized losses on our available-for-sale portfolio, shown as a component of accumulated other comprehensive income.  The decrease in equity during the nine months ended September 30, 2016 was principally due to the deconsolidation of RREF CDO 2006-1, RREF CDO 2007-1, Apidos Cinco CDO, Pelium Capital and RCM Global as a result of the consolidation guidance on variable interest entities which we adopted on January 1, 2016. Impairment losses taken on investment securities available-for-sale and intangible assets, provisions for loan loss, and the recognition of deferred tax asset valuation adjustments recorded during the three months ended September 30, 2016 also had a significant impact on the decrease of our equity from December 31, 2015 to September 30, 2016. In addition, equity also decreased due to stock repurchases and distributions on our common stock and preferred stock in excess of earnings.

104

Balance Sheet - Book Value Reconciliation

	Amount			Per Share
Book value at December 31, 2015, allocable to common shares (1)	$	544,161		$	17.63
Net income allocable to common shares	(43,436		)	(1.42		)
Change in other comprehensive income (loss):
Available-for-sale securities	6,340			0.21
Derivatives	3,430			0.11
Foreign currency conversion	63			—
Common dividends	(38,361		)	(1.26		)
Common dividends on unvested shares	(867		)	(0.03		)
Effect of fair value impact to retained earnings on deconsolidated VIE's (2)	(16,933		)	(0.55		)
Accretion from share repurchases during the period (3)	(9,236		)	0.16
Accretion (dilution) from additional shares issued during the period and other (4)	4,503			(0.14		)
Total net decrease	(94,497		)	(2.92		)
Book value at September 30, 2016, allocable to common shares (1)(5)	$	449,664		$	14.71

(1) Per share calculations exclude unvested restricted stock, as disclosed on the consolidated balance sheet, of 496,756 and 691,369 shares as of September 30, 2016 and December 31, 2015, respectively. The denominator for the calculation is 30,574,981 and 30,871,355 as of September 30, 2016 and December 31, 2015, respectively.

(2) Pursuant to updated accounting guidance adopted on January 1, 2016 on consolidation of variable interest entities, we deconsolidated and recorded fair value adjustments on RREF CDO 2006-1 of ($1.5 million) or ($0.05) per share, RREF CDO 2007-1 of ($9.8 million) or ($0.32) per share and Apidos Cinco CDO of ($5.6 million) or ($0.18) per share all of which were reflected in book value as of September 30, 2016.

(3) Under our repurchase plan, we purchased 2.8 million shares for $35.2 million through September 30, 2016, including 800,000 shares for $9.2 million during the nine months ended September 30, 2016.

(4) Includes issuance of common shares from our dividend reinvestment plan of 9,000 shares and 195,000 net change of unvested shares of restricted stock.

(5) Book value allocable to common shares is calculated as total stockholders' equity of $719.8 million less preferred stock equity of $270.1 million as of September 30, 2016.

105

Funds from Operations

We evaluate our performance based on several performance measures, including Funds From operations, or FFO, and Adjusted Funds From Operations, or AFFO, in addition to net income. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts as net income (computed in accordance with GAAP), excluding gains or losses on the sale of depreciable real estate, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for unconsolidated/uncombined partnerships and joint ventures.

AFFO is a computation made by analysts and investors to measure a real estate company’s operating performance. We calculate AFFO by adding or subtracting from FFO the impact of non-cash accounting items as well as the effects of items that we deem to be non-recurring in nature. We deem transactions to be non-recurring if a similar transaction has not occurred in the past two years, and if we do not expect a similar transaction to occur in the next two years. We adjust for these non-cash and nonrecurring items to analyze our ability to produce cash flow from on-going operations, which we have used to pay dividends to our shareholders. Non-cash adjustments to FFO include the following: impairment losses resulting from fair value adjustments on financial instruments; provisions for loan losses; equity investment gains and losses; straight-line rental effects; share based compensation expense; amortization of various deferred items and intangible assets; gains on sales of property that are wholly owned or owned through a joint venture; the cash impact of capital expenditures that are related to our real estate owned; and REIT tax planning adjustments, which primarily relate to accruals for owned properties for which we made a foreclosure election and adjustments to tax estimates with respect to the final resolution of foreclosed property when it is listed for sale. In addition, we calculate AFFO by adding and subtracting from FFO the realized cash impacts of the following: extinguishment of debt, reissuances of debt, sales of property and capital expenditures.

Management believes that FFO and AFFO are appropriate measures of our operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs. Management uses FFO and AFFO as measures of our operating performance, and believes they are also useful to investors because they facilitate an understanding of our operating performance apart from non-cash and non-recurring items, which may not necessarily be indicative of current operating performance and may not allow accurate period to period comparisons of our operating performance.

Although our calculations of AFFO may differ from the methodology used for calculating AFFO by other REITs and our FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs, we also believe that FFO and AFFO may provide us and our investors with an additional useful measure to compare our performance with some other REITs. Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to GAAP net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

106

The following table reconciles GAAP net income (loss) to FFO and AFFO for the periods presented (in thousands, except share and per share data):

	For the Three Months Ended												For the Nine Months Ended
	September 30,												September 30,
	2016			Per Share Data			2015			Per Share Data			2016			Per Share Data			2015			Per Share Data
Net income (loss) allocable to common shares - GAAP	$	(51,573	)	$	(1.69	)	$	6,778		$	0.21		$	(43,436	)	$	(1.42	)	$	(14,831	)	$	(0.45	)
Adjustments:
(Gains) losses on sales of property (1)	(32		)	—			19			—			(63		)	—			19			—
FFO allocable to common shares	(51,605		)	(1.69		)	6,797			0.21			(43,499		)	(1.42		)	(14,812		)	(0.45		)
Adjustments:
Non-cash items:
Provision (recovery) for loan losses	7,997			0.26			830			0.02			9,418			0.31			42,570			1.30
Amortization of deferred costs (non-real estate) and intangible assets	3,643			0.11			3,900			0.12			10,135			0.33			9,754			0.30
Amortization of discount on convertible senior notes	709			0.02			708			0.02			2,123			0.07			1,656			0.05
Impairment charge on intangible asset	3,671			0.12			—			—			3,671			0.12			—			—
Acceleration of deferred debt issuance costs from sale of Northport loans	—			—			—			—			2,560			0.08			—			—
Equity investment (gains) losses	(415		)	(0.01		)	(961		)	(0.03		)	(2,759		)	(0.09		)	(1,363		)	(0.04		)
Share-based compensation	1,766			0.06			(225		)	(0.01		)	4,444			0.15			1,560			0.05
Impairment losses on trading and available-for-sale securities	22,351			0.74			—			—			22,351			0.74			59			—
Unrealized losses (gains) on CMBS        marks - linked transactions (2)	—			—			—			—			—			—			(235		)	(0.01		)
Unrealized (gains) losses on trading portfolio	242			0.01			1,054			0.03			124			—			(264		)	(0.01		)
Unrealized (gains) losses on foreign exchange transactions	280			0.01			(2,750		)	(0.08		)	34			—			2,101			0.06
Unrealized (gains) losses on derivatives	227			0.01			1,248			0.04			(1,984		)	(0.06		)	2,324			0.08
Unrealized (gains) losses on loans held for sale	9,631			0.31			—			—			9,631			0.31			—			—
Loss on resale of debt	—			—			332			0.01			—			—			1,403			0.04
Change in mortgage servicing rights valuation reserve	800			0.03			900			0.03			5,600			0.18			650			0.02
Change in residential loan warranty reserve	1,268			0.04			201			—			1,600			0.05			601			0.02
Dead deal costs	—			—			—			—			—			—			399			0.01
REIT tax adjustments	12,283			0.40			—			—			12,283			0.40			317			0.01
Cash items:
Gains (losses) on sale of property (1)	32			—			(19		)	—			63			—			(19		)	—
Gains (losses) on extinguishment of debt	—			—			2,607			0.08			6,303			0.21			9,252			0.28
AFFO allocable to common shares	$	12,880		$	0.42		$	14,622		$	0.44		$	42,098		$	1.38		$	55,953		$	1.71
Weighted average common shares – diluted	30,528						32,951						30,513						32,726
AFFO per common share – diluted	$	0.42					$	0.44					$	1.38					$	1.71

(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 us on an equity basis.

(2) Due to a change in accounting guidance, as of January 1, 2015, the concept of linked transactions no longer exists.

107

Liquidity and Capital Resources

During the nine months ended September 30, 2016, our principal sources of liquidity were: liquidation of our investment in CVC Global Opportunities Fund, LP which returned $8.6 million of principal in January 2016, proceeds from our CRE securitizations which purchased future funding commitments utilizing repaid principal of $4.9 million, and $104 million in proceeds from the sale of our Northport TRS, LLC middle market loan portfolio. These sources of liquidity principally provided the bulk of $114.6 million of unrestricted cash we held at September 30, 2016.  In addition as of September 30, 2016, we had capital available through a CMBS term facility to help finance the purchase of CMBS securities of $81.4 million and $312.4 million combined from two CRE term facilities for the origination of commercial real estate loans.

On February 27, 2012, we entered into a master repurchase and securities agreement (the "Wells CRE Facility”) with Wells Fargo Bank, NA to finance the origination of commercial real estate loans. On October 31, 2014, we agreed to a modification of the terms of the Wells CRE Facility. The modification increases the facility maximum by $150.0 million to $400.0 million. On July 21, 2016, we agreed to a modification of the terms of the Wells CRE Facility. The modification extends the facility's maturity date to July 21, 2018, subject to three one-year extension rights which may extend the maturity to July 21, 2021. The amendment also modified certain financing rates and required debt yields. We paid extension fees as well as other standard closing costs.

On September 20, 2015, we entered into a master repurchase and securities agreement (the "Morgan Stanley Facility”) with Morgan Stanley Bank, NA to finance the origination of commercial real estate loans. We paid a commitment fee as well as other standard closing costs. The Morgan Stanley Facility has a maximum capacity of $250.0 million and an initial three year term that expires on September 10, 2018 with annual one year extension options.

In February 2011, we entered into a master repurchase and securities agreement ("Wells CMBS Facility") to finance the purchase of CMBS. The maximum amount of the Wells CMBS Facility is $100.0 million and had an original two year term with a one year option to extend. In April 2014, we agreed to a third amendment of the facility, which extended the termination date to January 31, 2016. In May 2015, we agreed to a fourth amendment of the facility, which extended the termination date to January 31, 2017. We may enter into interest rate swaps and cap agreements for securities whose average life exceeds two years to mitigate interest rate risk under the Wells CMBS Facility.

During the second quarter 2015, we entered into the first and second amendments of Northport TRS, LLC's Senior Secured Revolving Credit Agreement ("Northport Credit Facility"), which increased the original commitment from $225.0 million to $300.0 million and secured $85.0 million of additional availability, bringing the total available under the Northport Credit Facility to $225.0 million. On August 1, 2016, we entered into a purchase agreement to sell our interest in Northport TRS, LLC for $247.0 million. The transaction, which closed on August 4, 2016, included substantially all of the direct origination middle market loans and one syndicated loan with a par balance of $257.3 million and the assumption of the Northport Credit Facility by the purchaser, for net proceeds of approximately $104.2 million.

During the year ended December 31, 2015, our principal sources of liquidity were: net proceeds from our 8.0% convertible notes offering on January 13, 2015 of $97.0 million, the return of equity at the close of RCC 2015-CRE3 on February 24, 2015 of $78.0 million, the return of equity at the close of RCC 2015-CRE4 on August 18, 2015 of $29.7 million, liquidation of Moselle CLO S.A. which returned $30.0 million (which included $1.0 million of proceeds from forward currency contracts), liquidation of Apidos CDO III in June 2015 which returned $12.8 million of principal, cash flow from operations and $3.0 million of net proceeds from the sale of our 8.25% Series B Preferred Stock through our at the market, or ATM, program in January 2015. These sources of liquidity provided the bulk of the $78.8 million of unrestricted cash we held at December 31, 2015.  In addition, we had capital available through a CMBS term facility to help finance the purchase of CMBS securities of $74.4 million and $425.0 million combined from two CRE term facilities for the origination of commercial real estate loans.

Our on-going liquidity needs consist principally of funds to make investments, make debt repurchases, make distributions to our stockholders and pay our operating expenses, including management fees.  Our ability to meet our on-going liquidity needs will be subject to our ability to generate cash from operations and, with respect to our investments, our ability to maintain and/or obtain additional debt financing and equity capital together with the funds referred to above.  

Since December 2013, we have met a significant portion of our debt funding requirements for CRE loans through securitizations. In February 2015, we closed a $346.2 million CRE securitization, and in August 2015, we closed a $312.9 million CRE securitization, which brings our total to just in excess of $1.3 billion of mortgage loans financed during that period. We expect to derive substantial operating cash from our equity investments in the four newest securitizations, which do not have the same asset and interest coverage tests as are required by our legacy CRE CDOs. These CRE securitizations do not have reinvestment periods; however, principal payments, for a stipulated period, may be used to purchase funding participations with respect to existing collateral held outside of the securitizations. This will allow us to recycle some capital repaid and convert the designated

108

principal for funding companion loan participations, which would otherwise be used to pay down the most senior notes and reduce leverage and potential returns within the securitization.

Historically, we have financed a substantial portion of our portfolio investments through securitized notes that essentially match the maturity and repricing dates of these financing vehicles with the maturities and repricing dates of our investments, and, in view of current market conditions, we may continue to seek this type of securitization financing.  We derive substantial operating cash from our equity investments in our securitizations which, if the securitizations fail to meet certain tests, will cease.  Through September 30, 2016, we have not experienced difficulty in maintaining our existing securitized note financing and have passed all of the critical tests required by these financings.  However, we cannot assure you that we will meet all such critical tests in the future.  If we are unable to renew, replace or expand our sources of existing financing on substantially similar terms, we may be unable to implement our investment strategies successfully and may be required to liquidate portfolio investments.  If required, a sale of portfolio investments could be at prices lower than the carrying value of such assets, which would result in losses and reduced income.

The following table sets forth the distributions made and coverage test summaries for each of our securitizations for the periods presented (in thousands):

Name	Cash Distributions				Annualized Interest Coverage Cushion		Overcollateralization Cushion
	Nine Months Ended   September 30,		Year Ended December 31,		As of September 30,		As of September 30,		As of Initial Measurement Date
	2016		2015		2016 (1) (2)		2016 (3)
Apidos Cinco CDO (4)	$	2,254	$	6,336	$	1,926	$	21,441	$	17,774
RREF CDO 2006-1 (4) (9)	$	1,394	$	3,451	$	—	$	—	$	24,941
RREF CDO 2007-1 (4)	$	1,435	$	6,102	$	917	$	68,847	$	26,032
RCC CRE Notes 2013	$	3,525	$	9,129	N/A		N/A		N/A
RCC 2014-CRE2 (5)	$	9,954	$	15,826	N/A		$	61,189	$	20,663
RCC 2015-CRE3 (6)	$	8,559	$	9,186	N/A		$	29,960	$	20,313
RCC 2015-CRE4 (7)	$	9,220	$	3,291	N/A		$	29,319	$	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 our 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) The reinvestment period for Resource Capital Corp. 2014-CRE2 ended in July 2016. The indenture does not contains any 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 does not contain any 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 August 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 does not contain any 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 we began to liquidate Moselle CLO S.A. and, by January 2015, all of the assets were sold.

(9) RREF CDO 2006-1 was liquidated on April 25, 2016 and as a result, all $66.3 million of the remaining assets were returned to us in exchange for our preference shares and equity notes in the securitization.

109

At October 31, 2016, RSO's liquidity is derived from three primary sources:

• unrestricted cash and cash equivalents of $108.9 million and restricted cash of $30,000 in margin call accounts;

• capital available for reinvestment in two of RSO's CRE securitizations of $4.9 million, all of which is designated to finance future funding commitments on CRE loans; and

• loan principal repayments of $491,000 that will pay down outstanding CLO note balances, as well as interest collections of $80,000.

We also had a combined $297.0 million available through two term financing facilities to finance the origination of CRE loans and $74.3 million available through a term financing facility to finance the purchase of CMBS.    

Our leverage ratio, defined as the ratio of borrowings to stockholders' equity may vary as a result of the various funding strategies we use.  As of September 30, 2016 and December 31, 2015, our leverage ratio was 1.9 times and 2.3 times, respectively.  Our leverage has decreased primarily as a result of the deconsolidation of RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO, offset by the reduction of stockholder's equity due to credit impairments and the fair value adjustment recorded through retained earnings on those deconsolidated entities, as well as repurchases of our common stock and Series B preferred stock.

Several of our legacy CDOs and CLOs have been liquidated over the last few years. This trend continued in 2016. On April 25, 2016, we called and liquidated our investment in RREF CDO 2006-1. Our one remaining legacy CRE securitization and one remaining bank loan securitization have seen substantial pay downs of notes issued under their indentures as the underlying collateral has paid down or paid off in full. The table and footnotes below indicate current assets and liabilites in these legacy securitizations as well as our remaining equity and, in the case of our legacy CRE CDO, our share of notes repurchased and discounted purchase price of those notes. In the case of the CRE CDO, we expect to have assets distributed to us once the outstanding notes held by third parties have been paid off, which we anticipate in the fourth quarter of 2016. Once the loan assets are distributed we expect to be able to finance the loan assets on existing credit facilities.

The following tables presents the legacy securitizations' (deconsolidated at January 1, 2016) remaining equity as of September 30, 2016:

Name of Securitization	Fair Value of Asset Collateral		Cash		Total Assets		Outstanding Notes Held by Third Parties (at par)		Net Equity Held by RSO
RREF CDO 2007-1 (1)	$	132,729	$	—	$	132,729	$	34,733	$	97,996
Apidos Cinco CDO	$	59,889	$	16,277	$	76,166	$	54,861	$	21,305

(1) Subsequent to the closing of the securitization, we purchased notes in RREF CDO 2007-1 at substantial discounts to par. Certain of those notes have either been repaid or canceled as of September 30, 2016.  Of those repurchased notes that have not been repaid, cash gains on the extinguishment of debt of $13.8 million has not been recognized in AFFO as of September 30, 2016 on $20.3 million of notes purchased at a weighted average price of $31.81.  Additionally, of those notes that were not canceled and included in the net equity held by us are $26.0 million of notes purchased at a weighted average price of $32.40 with $17.6 million that has not been recognized in AFFO as of September 30, 2016.

Subsequent to the closing of the securitization, we purchased notes in RREF CDO 2006-1 at substantial discounts to par and certain of those notes had either been repaid or canceled.  Of those repurchased notes that have not been repaid or canceled, cash gains on the extinguishment of debt of $21.4 million has not been recognized in AFFO prior to liquidation on $32.4 million of notes purchased at a weighted average price of $33.85. We were able to finance a portion of the collateral after liquidation and recorded a cash gain on extinguishment adjustment of $6.3 million during the nine months ended September 30, 2016 and $15.1 million of cash gains remain unrecognized in AFFO.

110

Distributions

In order to maintain our qualification as a REIT and to minimize corporate-level income tax on our income, we intend to make regular quarterly distributions of all or substantially all of our net REIT taxable income to holders of our common stock.  This requirement can impact our liquidity and capital resources. 

The following tables present dividends declared (on a per share basis) for the three and nine months ended September 30, 2016 and the year ended December 31, 2015.

Common Stock
	Date Paid	Total Dividend Paid		Dividend Per Share
		(in thousands)
2016
March 31	April 28	$	13,073	$	0.42
June 30	July 28	$	13,051	$	0.42
September 30	October 28	$	13,012	$	0.42
2015
March 31	April 28	$	21,444	$	0.64
June 30	July 28	$	21,426	$	0.64
September 30	October 28	$	20,667	$	0.64
December 31	January 28, 2016	$	13,274	$	0.42

Preferred Stock
Series A						Series B					Series C
	Date Paid	Total Dividend Paid		Dividend Per Share		Date Paid	Total Dividend Paid		Dividend Per Share		Date Paid	Total Dividend Paid		Dividend Per Share
		(in thousands)					(in thousands)					(in thousands)
2016
March 31	May 2	$	568	$	0.531250	May 2	$	2,859	$	0.515625	May 2	$	2,588	$	0.539063
June 30	August 1	$	568	$	0.531250	August 1	$	2,859	$	0.515625	August 1	$	2,588	$	0.539063
September 30	October 31	$	568	$	0.531250	October 31	$	2,859	$	0.515625	October 31	$	2,588	$	0.539063
2015
March 31	April 30	$	568	$	0.531250	April 30	$	2,960	$	0.515625	April 30	2,588		0.539063
June 30	July 30	$	568	$	0.531250	July 30	$	2,960	$	0.515625	July 30	$	2,588	$	0.539063
September 30	October 30	$	568	$	0.531250	October 30	$	2,960	$	0.515625	October 30	$	2,588	$	0.539063
December 31	February 1, 2016	$	568	$	0.531250	February 1, 2016	$	2,960	$	0.515625	February 1, 2016	$	2,588	$	0.539063

111

Contractual Obligations and Commitments

	Contractual Commitments (8)
	(dollars in thousands)
	Payments due by Period
	Total		Less than 1 year		1 - 3 years		3- 5 years		More than 5 years
CRE Securitizations	$	528,972	$	—	$	—	$	—	$	528,972
Repurchase Agreements(1)	613,734		252,424		361,310		—		—
Unsecured Junior Subordinated Debentures (2)	51,548		—		—		—		51,548
6.0 % Convertible Notes (3)	111,346		—		111,346		—		—
8.0 % Convertible Notes (4)	96,242		—		—		96,242		—
Unfunded Commitments on CRE Loans (5)	78,842		—		78,842		—		—
Revolver Draws Available on Middle Market Loans (6)	952		—		—		952		—
Base Management Fees (7)	11,692		11,692		—		—		—
Pearlmark Mezzanine Realty Partners IV, L.P.(9)	30,464		—		—		30,464		—
Total	$	1,523,792	$	264,116	$	551,498	$	127,658	$	580,520

(1) Contractual commitments include $600,000 of interest expense payable through the maturity dates on our repurchase agreements.

(2) Contractual commitments do not include $29.7 million and $30.4 million of estimated interest expense payable through the maturity dates of June 2036 and October 2036, respectively, on our trust preferred securities.

(3) Contractual commitments do not include $17.5 million of interest expense payable through the maturity date of December 1, 2018 on our 6.0% Convertible Senior Notes.

(4) Contractual commitments do not include $28.4 million of interest expense payable through the maturity date of January 15, 2020 on our 8.0% Convertible Senior Notes.

(5) Unfunded commitments on our originated CRE loans generally fall into two categories: (1) pre-approved capital improvement projects; and (2) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, we would receive additional loan interest income on the advanced amount.

(6) On August 4, 2016, we sold Northport TRS, LLC.  This transaction included the assumption of the senior secured revolving credit agreement.

(7) Calculated only for the next 12 months based on our current equity, as defined in our management agreement.  Our management agreement also provides for an incentive fee arrangement that is based on operating performance.  Because the incentive fee is not a fixed and determinable amount, it is not included in this table.

(8) Contractual commitments on borrowings are presented net of deferred debt issuance costs.

(9) We have committed to invest up to $50.0 million in Pearlmark Mezzanine Realty Partners IV, L.P. The commitment termination date ends the earlier of when the original commitment is fully funded, or the fifth anniversary following the final closing date of June 24, 2015.

Off-Balance Sheet Arrangements

General

As of September 30, 2016, we did not maintain any relationships with unconsolidated entities or financial partnerships that were established for the purpose of facilitating off-balance sheet arrangements or contractually narrow or limited purposes, although we do have interests in unconsolidated entities not established for those purposes. Except as set forth below, as of September 30, 2016, we had not guaranteed obligations of any such unconsolidated entities or entered into any commitment or letter of intent to provide additional funding to any such entities.

Unfunded Commercial Real Estate Loan Commitments

In the ordinary course of business, we make commitments to borrowers whose loans are in our commercial real estate loan portfolio to provide additional loan funding in the future. These commitments generally fall into two categories: (1) pre-approved capital improvement projects; and (2) new or additional construction costs. Disbursement of funds pursuant to these commitments is subject to the borrower meeting pre-specified criteria. Upon disbursement of funds, we receive loan interest income on any such advanced funds. As of September 30, 2016, we had 40 loans with unfunded commitments totaling $67.3 million, which we intend to fund through principal repayments on other loans in our portfolio and the ability to fund in our newest securitizations within a specified time period and cash flow from normal operating activities. These commitments are subject to the same underwriting requirements and ongoing portfolio maintenance as are the on-balance sheet financial instruments that we

112

hold. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

Unfunded Middle Market Loan Commitments

As of September 30, 2016, we have one middle market loan, after the sale of Northport TRS, LLC, which had an unfunded commitment totaling $950,000. We intend to fund this commitment through cash flow from normal operating activities. Disbursement of funds pursuant to this commitment is subject to the borrower meeting pre-specified criteria and in some instances, discretion. Since this commitment may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

Hedging Instruments

A significant market risk to us is interest rate risk.  Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.  Changes in the general level of interest rates can affect net interest income, which is the difference between the interest income earned on interest-earning assets and the interest expense incurred in connection with the interest-bearing liabilities, by affecting the spread between the interest-earning assets and interest-bearing liabilities.  Changes in the level of interest rates also can affect the value of our interest-earning assets and our ability to realize gains from the sale of these assets.  A decline in the value of our interest-earning assets pledged as collateral for borrowings could result in the counterparties demanding additional collateral pledges or liquidation of some of the existing collateral to reduce borrowing levels.

We are also exposed to foreign currency exchange risk, a form of risk that arises from the change in price of one currency against another. Substantially all of our revenues are transacted in U.S. dollars; however, a portion of our capital is exposed to other currencies, primarily the Euro and, to a lesser extent, the pound sterling. To address this market risk, we generally hedge our foreign currency-denominated exposures (typically investments in debt instruments, including forecasted principal and interest payments) with foreign currency forward contracts. We classify these hedges as fair value hedges, which are hedges that mitigate the risk of changes in the fair values of assets, liabilities, and certain types of firm commitments. We record changes in the fair value of derivatives designated and effective as fair value hedges in earnings offset by corresponding changes in the fair values of the hedged items.

The following tables present the fair value of our derivative financial instruments as well as their classification on our consolidated balance sheets and on the consolidated statements of operations for the years presented:

Fair Value of Derivative Instruments as of September 30, 2016

(in thousands)

	Asset Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements	$	260,970	Derivatives, at fair value	$	3,677
Forward contracts - residential mortgage lending	$	79,838	Derivatives, at fair value	$	237
Forward contracts - foreign currency, hedging (1)(2)	$	16,993	Derivatives, at fair value	$	137
Forward contracts - TBA securities	$	1,000	Derivatives, at fair value	$	1
	Liability Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock contracts	$	2,636	Derivatives, at fair value	$	4
Forward contracts - residential mortgage lending	$	352,342	Derivatives, at fair value	$	1,897
Forward contracts - foreign currency, hedging (1)(3)	$	8,848	Derivatives, at fair value	$	104
Forward contracts - TBA securities	$	43,000	Derivatives, at fair value	$	153
Interest rate swap contracts, hedging	$	—	Accumulated other comprehensive (income) loss	$	41

(1) Notional amount presented on a currency converted basis. The base currency notional amount of our foreign currency hedging forward contracts in an asset position was €15.1 million as of September 30, 2016.

(2) Foreign currency forward contracts are accounted for as fair value hedges.

(3) Notional amount presented on a currency converted basis. The base currency notional amount of our foreign currency hedging forward contracts in a liability position was €7.9 million as of September 30, 2016.

113

Fair Value of Derivative Instruments as of December 31, 2015:

(in thousands)

	Asset Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements (1)	$	105,385	Derivatives, at fair value	$	1,224
Forward contracts - residential mortgage lending	$	92,413	Derivatives, at fair value	$	345
Forward contracts - foreign currency, hedging (2)(3)	$	24,850	Derivatives, at fair value	$	727
Forward contracts - TBA securities	$	29,500	Derivatives, at fair value	$	99
Warrants (4)	$	553	Derivatives, at fair value	$	1,051
	Liability Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate swap contracts, hedging (5)	$	102,799	Derivatives, at fair value	$	3,459
Interest rate lock agreements (6)	$	505	Derivatives, at fair value	$	3
Forward contracts - residential mortgage lending	$	143,553	Derivatives, at fair value	$	479
Forward contracts - TBA securities	$	1,500	Derivatives, at fair value	$	—
Interest rate swap contracts, hedging	$	102,799	Accumulated other comprehensive (income) loss	$	(3,471	)

(1) The notional amount of the Company's IRLCs in an asset position is the total commitment weighted by the probability of closing the loan.

(2) Notional amount presented on currency converted basis. The base currency notional amount of our foreign currency hedging forward contracts was €22.9 million as of December 31, 2015.

(3) Foreign currency forward contracts are accounted for as fair value hedges.

(4) The notional amount of our warrants is the calculated number of shares available for purchase.

(5) Interest rate swap contracts are accounted for as cash flow hedges.

(6) The notional amount of the Company's IRLCs in a liability position is the total commitment weighted by the probability of closing the loan.

The Effect of Derivative Instruments on the Statements of Operations for the

Nine Months EndedSeptember 30, 2016

(in thousands)

	Derivatives
		Statement of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging		Interest expense	$	(95	)
Interest rate lock agreements		Gain (loss) on sale of residential mortgage loans	$	2,452
Forward contracts - residential mortgage lending		Gain (loss) on sale of residential mortgage loans	$	(1,577	)
Forward contracts - foreign currency, hedging		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	(733	)
Forward contracts - TBA securities		Gain (loss) on sale of residential mortgage loans	$	(1,070	)

(1) Negative values indicate a decrease to the associated balance sheet or consolidated statement of operations line items.

114

The Effect of Derivative Instruments on the Statements of Operations for the

Nine Months EndedSeptember 30, 2015

(in thousands)

	Derivatives
		Statement of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging		Interest expense	$	4,923
Interest rate swap contracts, hedging		Gain (loss) on sale of residential mortgage loans	$	(34	)
Interest rate lock agreements		Gain (loss) on sale of residential mortgage loans	$	1,128
Forward contracts - RMBS securities		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	(122	)
Forward contracts - residential mortgage lending		Gain (loss) on sale of residential mortgage loans	$	(197	)
Forward contracts - foreign currency, hedging		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	2,254
Options - U.S. Treasury futures		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	184
Forward contracts - TBA securities		Gain (loss) on sale of residential mortgage loans	$	415

(1)Negative values indicate a decrease to the associated balance sheets or consolidated statements of operations line items.

On January 1, 2016, we deconsolidated RREF CDO 2006-1 and RREF CDO 2007-1 in accordance with guidance on consolidation. This resulted in the deconsolidation of six CRE interest rate swaps.

During April 2016, we requested and canceled our remaining interest rate swap contract through accumulated other comprehensive income (loss), to be amortized through earnings over the life of the remaining debt. As of September 30, 2016, the Company had no interest rate swap contracts outstanding.

115

ITEM 3 . QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 30, 2016, the primary component of our market risk was interest rate risk, as described below. While we do not seek to avoid risk completely, we do seek to assume risk that can be quantified from historical experience, to actively manage that risk, to earn sufficient compensation to justify assuming that risk and to maintain capital levels consistent with the risk we undertake or to which we are exposed.

Effect on Fair Value

A component of interest rate risk is the effect changes in interest rates will have on the fair value of our assets. We face the risk that the fair value of our assets will increase or decrease at different rates than that of our liabilities, including our hedging instruments.

Primarily, we assess our interest rate risk by estimating the duration of our assets and the duration of our liabilities. Duration essentially measures the market price volatility of financial instruments as interest rates change. Generally, we calculate duration using various financial models and empirical data. Different models and methodologies can produce different duration numbers for the same securities.

The following sensitivity analysis tables present, at September 30, 2016 and December 31, 2015, the estimated impact on the fair value of our interest rate-sensitive investments and liabilities of changes in interest rates, assuming rates instantaneously fall 100 basis points and rise 100 basis points (dollars in thousands):

	September 30, 2016
	Interest rates fall 100 basis points			Unchanged			Interest rates rise 100 basis points
CMBS – private placement (1):
Fair value	$	71,386		$	71,087		$	70,794
Change in fair value	$	299		$	—		$	(293	)
Change as a percent of fair value	0.42		%	—		%	(0.41		)%

	December 31, 2015
	Interest rates fall 100 basis points			Unchanged			Interest rates rise 100 basis points
CMBS – private placement (1):
Fair value	$	145,175		$	144,178		$	143,201
Change in fair value	$	997		$	—		$	(977	)
Change as a percent of fair value	0.69		%	—		%	(0.68		)%
Hedging instruments:
Fair value	$	(4,713	)	$	(3,459	)	$	(1,704	)
Change in fair value	$	(1,254	)	$	—		$	1,755
Change as a percent of fair value	(36.25		)%	—		%	50.74		%

(1)Includes the fair value of available-for-sale investments that are sensitive to interest rate change.

For purposes of the table, we have excluded our investments with variable interest rates that are indexed to LIBOR. Because the variable rates on these instruments are short-term in nature, we are not subject to material exposure to movements in fair value as a result of changes in interest rates.

116

It is important to note that the impact of changing interest rates on fair value can change significantly when interest rates change beyond 100 basis points from current levels. Therefore, the volatility in the fair value of our assets could increase significantly when interest rates change beyond 100 basis points from current levels. In addition, other factors impact the fair value of our interest rate-sensitive investments and hedging instruments, such as the shape of the yield curve, market expectations as to future interest rate changes and other market conditions. Accordingly, in the event of changes in actual interest rates, the change in the fair value of our assets would likely differ from that shown above and such difference might be material and adverse to our stockholders.

Risk Management

To the extent consistent with maintaining our status as a REIT, we seek to manage our interest rate risk exposure to protect our portfolio of fixed-rate commercial real estate mortgages and CMBS and related debt against the effects of major interest rate changes. We generally seek to manage our interest rate risk by:

• monitoring and adjusting, if necessary, the reset index and interest rate related to our mortgage-backed securities and our borrowings;

• attempting to structure our borrowing agreements for our CMBS to have a range of different maturities, terms, amortizations and interest rate adjustment periods; and

• using derivatives, financial futures, swaps, options, caps, floors and forward sales, to adjust the interest rate sensitivity of our fixed-rate commercial real estate mortgages and CMBS and our borrowing which we discuss in “Financial Condition-Hedging Instruments.”

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our Chief Executive Officer and Chief Financial Officer, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three and nine months ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

117

PART II

ITEM 1. LEGAL PROCEEDINGS

In September 2015, Daren Levin filed a putative class action in the United States District Court for the Southern District of New York on behalf of all persons who purchased our common stock between March 2, 2015 and August 4, 2015.  In November 2015, the Court appointed Douglas Drees as the lead plaintiff in the action, and thereafter entered a stipulation and order directing the lead plaintiff to file an amended complaint.  In February 2016, the lead plaintiff filed an amended complaint, alleging that we and certain of our officers and directors materially misrepresented certain risks of our commercial loan portfolio and our processes and controls for assessing the quality of our portfolio.  Based on these allegations, the amended complaint asserts claims for violation of the securities laws and seeks a variety of relief, including unspecified monetary damages as well as costs and attorneys’ fees.  In April 2016, we filed a motion to dismiss the amended complaint, which the court denied on October 5, 2016; and the discovery process is now expected to commence. We believe the amended complaint is without merit and intend to defend ourselves vigorously.

              In December 2015, Josh Reaves filed a shareholder derivative suit in the Supreme Court of New York alleging that our directors and certain officers breached their fiduciary duties by causing us to misrepresent certain risks of our commercial loan portfolio, by failing to employ adequate internal and financial controls and by failing to disclose the alleged internal control deficiencies.  The complaint purports to seek relief on behalf of us for unspecified damages as well as costs and attorneys’ fees.  We believe that the plaintiff, who failed to make a pre-suit demand on the board of directors, lacks standing to assert claims derivatively on our behalf. In April 2016, the parties entered into a stipulation staying this proceeding until such time as the court ruled on the motion to dismiss the Levin action referenced above or certain other triggering events occur. That stay has now been lifted because the motion was to dismiss the Levin action was denied.

PCM is a party to various claims and legal proceedings at various times. If PCM believes that a loss arising from any of these matters is probable and can be reasonably estimated, the loss is recorded. Currently, the only litigation involving PCM relates to claims for repurchases or indemnifications on loans that PCM has sold to investors.  Such claims are included in the reserve for mortgage repurchases and indemnifications. The reserve for mortgage repurchases and indemnifications was $5.2 million and $3.7 million as of September 30, 2016 and December 31, 2015, respectively.

Loans on one-to-four family residential mortgages originated by PCM are sold to various financial institutions and governmental entities with representations and warranties that are usual and customary for the industry. In the event of a breach of any of the representations and warranties related to a loan sold, PCM may be required to indemnify the investor against future losses, repurchase the mortgage loan or reimburse the investor for actual losses incurred (referred to as “make whole payments”).  The maximum exposure to credit loss in the event of an indemnification or loan repurchase would be the unpaid principal balance of the loan along with any premium paid by the investor when the loan was purchased, accrued but unpaid interest and other minor cost reimbursements.  This maximum exposure is at least partially mitigated by the value of the collateral underlying the mortgage loan.

On May 13, 2014, ResCap Liquidating Trust (“ResCap”), as successor to Residential Funding Company, LLC (“RFC”), filed an adversary proceeding against PCM in United States Bankruptcy Court of the Southern District of New York.  ResCap has sued some 90 sellers of residential mortgage loans for alleged breaches of warranty in various loans sold to RFC.  RFC contends that such breaches caused it damages from loan losses and liability to other transferee's of the loans. 

As of September 30, 2016, outstanding demands for indemnification, repurchase or make whole payments totaled approximately $20.5 million, of which a substantial portion related to loans sold to four investors prior to 2011.  In October 2016, PCM reached agreements to settle repurchase claims with two of the four investors, including those subject to the litigation initiated by ResCap.  Pursuant to the settlement agreements, $2.1 million was fully reserved for at September 30, 2016.  These settlement agreements reduce the amount of outstanding demands against PCM for indemnification, repurchase and make whole payments to approximately $10.0 million.

The most significant remaining make whole demands against PCM are from Lehman Brothers Holding, Inc. (“LBHI”). On February 3, 2016, LBHI filed an adversary proceeding against PCM in United States Bankruptcy Court of the Southern District of New York.  LBHI has sued approximately 145 sellers of residential mortgage loans for alleged breaches of warranty in various loans sold to it.  LBHI contends that such breaches caused it damages from loan losses and liability to other transferees of the loans.  PCM intends to defend the action vigorously.

118

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On August 3, 2015, our Board of Directors authorized a program to repurchase up to $50.0 million of our outstanding equity and debt securities. In March 2016, the Board of Directors approved a new securities repurchase program for up to $50.0 million of our outstanding securities, which replaced the August 2015 repurchase plan.

The following tables provide information about our common stock and 8.25% Series B Preferred Stock repurchases made during the nine months ended September 30, 2016 in accordance with the previously mentioned stock repurchase program:

Common Stock
Period	Total Number of Shares Purchased	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans of Programs
January 2016	196,562	$	12.81	196,562	$	21,556,458
February 2016	198,979	$	10.08	198,979	$	19,551,480
March 2016	247,904	$	11.14	247,904	$	46,828,116
April 2016	22,013	$	11.12	22,013	$	46,583,349
May 2016	37,200	$	12.61	37,200	$	46,114,214
June 2016	—	$	—	—	$	46,114,214
July 2016	—	$	—	—	$	46,114,214
August 2016	97,542	$	12.70	97,542	$	44,875,735
September 2016	—	$	—	—	$	44,875,735
	800,200	$	11.54	800,200

(1) The average price per share as reflected above includes broker fees and commissions.

8.25% Series B Preferred Stock
Period	Total Number of Shares Purchased	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans of Programs
January 2016	—	$	—	—	$	—
February 2016	—	$	—	—	$	—
March 2016	195,900	$	15.90	195,900	$	46,828,116
April 2016	—	$	—	—	$	—
May 2016	—	$	—	—	$	—
June 2016	—	$	—	—	$	—
July 2016	—	$	—	—	$	—
August 2016	—	$	—	—	$	—
September 2016	—	$	—	—	$	—
	195,900	$	15.90	195,900

(1) The average price per share as reflected above includes broker fees and commissions.

119

ITEM 6. EXHIBITS

Exhibit No.	Description
3.1(a)	Restated Certificate of Incorporation of Resource Capital Corp. (1)
3.1(b)	Articles of Amendment to Restated Certificate of Incorporation of Resource Capital Corp. (29)
3.1(c)	Articles Supplementary 8.50% Series A Cumulative Redeemable Preferred Stock. (16)
3.1(d)	Articles Supplementary 8.50% Series A Cumulative Redeemable Preferred Stock. (17)
3.1(e)	Articles Supplementary 8.25% Series B Cumulative Redeemable Preferred Stock. (18)
3.1(f)	Articles Supplementary 8.25% Series B Cumulative Redeemable Preferred Stock. (22)
3.1(g)	Articles Supplementary 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock. (9)
3.2	Amended and Restated Bylaws of Resource Capital Corp. (as Amended January 31, 2014) (12)
4.1(a)	Form of Certificate for Common Stock for Resource Capital Corp. (1)
4.1(b)	Form of Certificate for 8.50% Series A Cumulative Redeemable Preferred Stock. (13)
4.1(c)	Form of Certificate for 8.25% Series B Cumulative Redeemable Preferred Stock (18)
4.1(d)	Form of Certificate for 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock. (9)
4.2(a)	Junior Subordinated Indenture between Resource Capital Corp. and Wells Fargo Bank, N.A., dated May 25, 2006. (2)
4.2(b)	Amendment to Junior Subordinated Indenture and Junior Subordinated Note due 2036 between Resource Capital Corp. and Wells Fargo Bank, N.A., dated October 26, 2009 and effective September 30, 2009. (6)
4.3(a)	Amended and Restated Trust Agreement among Resource Capital Corp., Wells Fargo Bank, N.A., Wells Fargo Delaware Trust Company and the Administrative Trustees named therein, dated May 25, 2006. (2)
4.3(b)	Amendment to Amended and Restated Trust Agreement and Preferred Securities Certificate among Resource Capital Corp., Wells Fargo Bank, N.A. and the Administrative Trustees named therein, dated October 26, 2009 and effective September 30, 2009. (6)
4.4	Amended Junior Subordinated Note due 2036 in the principal amount of $25,774,000, dated October 26, 2009. (6)
4.5(a)	Junior Subordinated Indenture between Resource Capital Corp. and Wells Fargo Bank, N.A., dated September 29, 2006. (3)
4.5(b)	Amendment to Junior Subordinated Indenture and Junior Subordinated Note due 2036 between Resource Capital Corp. and Wells Fargo Bank, N.A., dated October 26, 2009 and effective September 30, 2009. (6)
4.6(a)	Amended and Restated Trust Agreement among Resource Capital Corp., Wells Fargo Bank, N.A., Wells Fargo Delaware Trust Company and the Administrative Trustees named therein, dated September 29, 2006. (3)
4.6(b)	Amendment to Amended and Restated Trust Agreement and Preferred Securities Certificate among Resource Capital Corp., Wells Fargo Bank, N.A. and the Administrative Trustees named therein, dated October 26, 2009 and effective September 30, 2009. (6)
4.7	Amended Junior Subordinated Note due 2036 in the principal amount of $25,774,000, dated October 26, 2009. (6)
4.8(a)	Senior Indenture between the Company and Wells Fargo Bank, National Association, as Trustee, dated October 21, 2013. (25)
4.8(b)	First Supplemental Indenture between the Company and Wells Fargo Bank, National Association, as Trustee (including the form of 6.00% Convertible Senior Note due 2018). (25)
4.8(c)	Form of 6.00% Convertible Senior Note due 2018 (included in Exhibit 4.8(b)).
4.8(d)	Second Supplemental Indenture, dated January 13, 2015, between Resource Capital Corp. and Wells Fargo Bank, National Association, as Trustee (including the form of 8.00% Convertible Senior Note due 2020). (20)
4.8(e)	Form of 8.00% Convertible Senior Note due 2020 (included in Exhibit 4.8(d)).
10.1(a)	Second Amended and Restated Management Agreement between Resource Capital Corp, Resource Capital Manager, Inc. and Resource America, Inc. dated as of June 13, 2012. (28)
10.1(b)	Amendment No.1 to Second Amended and Restated Management Agreement between Resource Capital Corp, Resource Capital Manager, Inc. and Resource America, Inc. dated as of November 7, 2013.(4)
10.2(a)	2005 Stock Incentive Plan. (1)
10.2(b)	Form of Stock Award Agreement. (8)
10.2(c)	Form of Stock Option Agreement. (8)
10.3(a)	Amended and Restated Omnibus Equity Compensation Plan. (7)
10.3(b)	Form of Stock Award Agreement. (27)
10.3(c)	Form of Stock Award Agreement (for employees with Resource America, Inc. employment agreements). (27)

120

10.4	Services Agreement between Resource Capital Asset Management, LLC and Apidos Capital Management, LLC, dated February 24, 2011. (11)
10.5	8.50% Series A Cumulative Redeemable Preferred Stock, 8.25% Series B Cumulative Redeemable Preferred Stock, 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock At-the-Market Issuance Sales Agreement, dated November 19, 2014 among the Company, Resource Capital Manager Inc. and MLV & Co., LLC. (26)
10.6	Senior Secured Revolving Credit Agreement, dated September 18, 2014, among Northport TRS, LLC, as borrower, Resource Capital Corp., as guarantor, JP Morgan Chase Bank, N.A., as administrative agent, and the lenders thereto. (19)
10.6(b)	Amended and Restated Senior Secured Revolving Credit Agreement, dated August 4, 2016, among Northport TRS, LLC, as borrower, JP Morgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as Syndication Agent, and the lenders thereto.
10.7	Letter Agreement between Resource Capital Corp. and Resource America, Inc. (31)
10.8	Membership Interest Purchase Agreement, dated as of August 1, 2016, by and among CVC Credit Partners U.S. Lending I, L.P., Coller International Partners VII, L.P., Coller International Partners VII Parallel Fund, L.P. and Coller International Partners VII Luxembourg, SLP (solely with respect to Section 6.7 thereof), NEW NP, LLC, and Resource Capital Corp. (solely with respect to Section 6.8 thereof)).(32)
12.1	Statements re Computation of Ratios
31.1	Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Financial Officer.
32.1	Certification Pursuant to 18 U.S.C. Section 1350.
32.2	Certification Pursuant to 18 U.S.C. Section 1350.
99.1(a)	Master Repurchase and Securities Contract by and among RCC Commercial, Inc., RCC Real Estate Inc. and Wells Fargo Bank, National Association, dated February, 1, 2011. (10)
99.1(b)	Guaranty Agreement made by Resource Capital Corp. in favor of Wells Fargo Bank, National Association, dated February 1, 2011. (10)
99.2(a)	Master Repurchase and Securities Contract for $150,000,000 between RCC Real Estate SPE 4, LLC, as Seller, and Wells Fargo Bank, National Association, as Buyer, Dated February 27, 2012. (14)
99.2(b)	Guaranty made by Resource Capital Corp. as guarantor, in favor of Wells Fargo Bank, National Association, dated February 27, 2012 (14)
99.2(c)	First Amendment to Master Repurchase and Securities Contract and Other Documents between RCC Real Estate SPE 4, LLC, as seller, and Wells Fargo Bank, National Association, as buyer, dated April 2, 2013. (23)
99.3(a)	Master Purchase Agreement by and between RCC Real Estate SPE 5, LLC, as, master seller, and Deutsche Bank AG, Cayman Islands Branch, as buyer, dated as of July 19, 2013. (24)
99.4(a)	Master Repurchase and Securities Contract dated as of June 20, 2014 with Well Fargo Bank, National Association. (5)
99.4(b)	Guaranty Agreement dated as of June 20, 2014, made by Resource Capital Corp., as guarantor, in favor of Wells Fargo Bank, National Association. (5)
99.5(a)	Master Repurchase and Securities Contract Agreement between RCC Real Estate 6, LLC and Morgan Stanley Bank, NA, dated as of September 10, 2015. (30)
99.5(b)	Guarantee dated as of September 10, 2015, made by Resource Capital Corp., as guarantor, in favor of Morgan Stanley Bank, N.A. (30)
101	Interactive Data Files.

121

(1)	Filed previously as an exhibit to the Company’s registration statement on Form S-11, Registration No. 333-126517.
(2)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.
(3)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.
(4)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.
(5)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 26, 2014.
(6)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.
(7)	Filed previously as an exhibit to the Company’s Proxy Statement filed on April 16, 2014.
(8)	Filed previously as an exhibit to the Company’s Registration Statement on Form S-11 (File No. 333-132836).
(9)	Filed previously as an exhibit to the Company’s Registration Statement on Form 8-A filed on June 9, 2014.
(10)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.
(11)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on March 2, 2011.
(12)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on February 4, 2014.
(13)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 18, 2013.
(14)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on March 2, 2012.
(15)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 13, 2012.
(16)	Filed previously as an exhibit to the Company’s registration statement on Form 8-A filed on June 8, 2012.
(17)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 29, 2012.
(18)	Filed previously as an exhibit to the Company's Registration Statement on Form 8-A filed on September 28, 2012.
(19)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 23, 2014.
(20)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on January 13, 2015.
(21)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on October 1, 2012.
(22)	Filed previously as an exhibit to the Company Current Report on Form 8-K filed on March 19, 2013.
(23)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on April 8, 2013.
(24)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on July 25, 2013.
(25)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on October 21, 2013.
(26)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on November 20, 2014.
(27)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.
(28)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.
(29)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 1, 2015.
(30)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 16, 2015.
(31)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.
(32)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on August 5, 2016.

122

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		RESOURCE CAPITAL CORP.
		(Registrant)
November 14, 2016	By:	/s/ Robert C. Lieber
		Robert C. Lieber
		Chief Executive Officer and President
November 14, 2016	By:	/s/ David J. Bryant
		David J. Bryant
		Senior Vice President
		Chief Financial Officer and Treasurer
November 14, 2016	By:	/s/ Eldron C. Blackwell
		Eldron C. Blackwell
		Vice President
		Chief Accounting Officer

123

EX-10.7

EXECUTION VERSION

AMENDED AND RESTATED SENIOR SECURED REVOLVING CREDIT AGREEMENT

dated as of

August 4, 2016

among

NORTHPORT TRS, LLC

as Borrower

The LENDERS Party Hereto

and

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

ING CAPITAL LLC, as Syndication Agent

$180,000,000

__________________

JPMORGAN CHASE BANK, N.A.

ING CAPITAL LLC

as Joint Bookrunners and Joint Lead Arrangers

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS............................................................................................................1

SECTION 1.01.     Defined Terms .............................................................................................1

SECTION 1.02.     Classification of Loans and Borrowings ....................................................25

SECTION 1.03.     Terms Generally.........................................................................................25

SECTION 1.04.     Accounting Terms; GAAP .........................................................................25

ARTICLE II THE CREDITS.........................................................................................................26

SECTION 2.01.The Commitments ......................................................................................26

SECTION 2.02.Loans and Borrowings ...............................................................................26

SECTION 2.03.Requests for Borrowings............................................................................27

SECTION 2.04.[Reserved] ..................................................................................................28

SECTION 2.05.Funding of Borrowings ..............................................................................28

SECTION 2.06.Interest Elections ........................................................................................29

SECTION 2.07.Termination or Reduction of the Commitments ........................................30

SECTION 2.08.Repayment of Loans; Evidence of Debt ....................................................30

SECTION 2.09.Prepayment of Loans .................................................................................31

SECTION 2.10.Fees ............................................................................................................34

SECTION 2.11.Interest........................................................................................................34

SECTION 2.12.Market Disruption, Alternate Rate of Interest and Illegality .....................35

SECTION 2.13.Computation of Interest .............................................................................36

SECTION 2.14.Increased Costs ..........................................................................................36

SECTION 2.15.Break Funding Payments ...........................................................................37

SECTION 2.16.Taxes ..........................................................................................................38

SECTION 2.17.Payments Generally; Pro Rata Treatment; Sharing of Set-offs .................41

SECTION 2.18.Defaulting Lenders.....................................................................................43

SECTION 2.19.Mitigation Obligations; Replacement of Lenders ......................................43

SECTION 2.20.Extension of Maturity Date ........................................................................44

ARTICLE III REPRESENTATIONS AND WARRANTIES ......................................................45

SECTION 3.01. Organization; Powers .................................................................................45

SECTION 3.02.     Authorization; Enforceability ....................................................................45

SECTION 3.03.     Governmental Approvals; No Conflicts ....................................................45

SECTION 3.04.     Financial Condition; No Material Adverse Change ...................................45

SECTION 3.05.     Litigation; Actions, Suits and Proceedings ................................................46

SECTION 3.06.     Compliance with Laws and Agreements ...................................................46

SECTION 3.07. Anti-Corruption Laws and Sanctions; Anti-Money Laundering Laws......46

    i

#4841-8625-7971v16

SECTION 3.08.     Taxes ..........................................................................................................47

SECTION 3.09.     ERISA ........................................................................................................47

SECTION 3.10. Disclosure ...................................................................................................47

SECTION 3.11.Investment Company Act; Investment Policies; Margin Regulations…....48

SECTION 3.12.Material Agreements and Liens .................................................................48

SECTION 3.13.Subsidiaries and Investments .....................................................................49

SECTION 3.14.Properties ...................................................................................................49

SECTION 3.15.Affiliate Agreements ..................................................................................49

SECTION 3.16.Security Documents ...................................................................................49

SECTION 3.17.EEA Financial Institutions .........................................................................50

ARTICLE IV CONDITIONS .......................................................................................................50

SECTION 4.01.Restatement Effective Date........................................................................50

SECTION 4.02.Each Credit Event ......................................................................................52

ARTICLE V AFFIRMATIVE COVENANTS..............................................................................53

SECTION 5.01.Financial Statements and Other Information .............................................53

SECTION 5.02.Notices of Material Events.........................................................................56

SECTION 5.03.Existence; Conduct of Business .................................................................56

SECTION 5.04.Payment of Obligations..............................................................................56

SECTION 5.05.Maintenance of Properties; Insurance ........................................................56

SECTION 5.06.Books and Records; Inspection Rights ......................................................57

SECTION 5.07.Compliance with Laws ..............................................................................57

SECTION 5.08.Certain Obligations Respecting Subsidiaries; Further Assurances ............57

SECTION 5.09.Use of Proceeds..........................................................................................59

SECTION 5.10.Exemption from Registration under Investment Company Act ................59

SECTION 5.11.Investment and Valuation Policies.............................................................59

SECTION 5.12.Portfolio Valuation and Diversification, Etc .............................................59

SECTION 5.13.Calculation of Borrowing Base ..................................................................63

ARTICLE VI NEGATIVE COVENANTS ..................................................................................71

SECTION 6.01.Indebtedness ...............................................................................................71

SECTION 6.02.Liens ...........................................................................................................72

SECTION 6.03.Fundamental Changes and Dispositions of Assets ....................................73

SECTION 6.04.Investments ................................................................................................74

SECTION 6.05.Restricted Payments ...................................................................................74

SECTION 6.06.Certain Restrictions on Subsidiaries ..........................................................75

SECTION 6.07.Certain Financial Covenants ......................................................................75

SECTION 6.08.Transactions with Affiliates .......................................................................76

SECTION 6.09.Lines of Business .......................................................................................76

SECTION 6.10.No Further Negative Pledge .......................................................................76

    ii

#4841-8625-7971v16

SECTION 6.11.Modifications of Certain Documents .........................................................76

SECTION 6.12.Payments of Other Indebtedness ................................................................77

ARTICLE VII EVENTS OF DEFAULT .....................................................................................77

ARTICLE VIII THE ADMINISTRATIVE AGENT ...................................................................81

ARTICLE IX MISCELLANEOUS ..............................................................................................84

SECTION 9.01.Notices; Electronic Communications ........................................................84

SECTION 9.02.Waivers; Amendments ...............................................................................85

SECTION 9.03.Expenses; Indemnity; Damage Waiver ......................................................87

SECTION 9.04.Successors and Assigns..............................................................................89

SECTION 9.05.Survival ......................................................................................................92

SECTION 9.06.Counterparts; Integration; Effectiveness; Electronic Execution ................92

SECTION 9.07.Severability ................................................................................................93

SECTION 9.08.Right of Setoff............................................................................................93

SECTION 9.09.Governing Law; Jurisdiction; Etc. .............................................................93

SECTION 9.10.WAIVER OF JURY TRIAL ......................................................................94

SECTION 9.11.[Reserved] ..................................................................................................94

SECTION 9.12.Headings ....................................................................................................94

SECTION 9.13.Treatment of Certain Information; Confidentiality ....................................94

SECTION 9.14.USA PATRIOT Act ...................................................................................95

SECTION 9.15. Acknowledgment and Consent to Bail-In of EEA Financial Institutions..................................................................................................96

SECTION 9.16.No Fiduciary Duty .....................................................................................96

SECTION 9.17.Termination ................................................................................................97

SECTION 9.18Lender Representations. .............................................................................97

    iii

#4841-8625-7971v16

SCHEDULE I	– Commitments
SCHEDULE II	– Material Agreements and Liens
SCHEDULE III	– Litigation
SCHEDULE IV	– Subsidiaries and Investments
SCHEDULE V	– Transactions with Affiliates
SCHEDULE VI	– Moody’s Industry Classification Group List
SCHEDULE VII	– Approved Dealers and Approved Pricing Services
EXHIBIT A –	Form of Assignment and Assumption
EXHIBIT B –	[Reserved]
EXHIBIT C –	Form of Borrowing Base Certificate
EXHIBIT D –	Form of Borrowing Request
EXHIBIT E –	Form of Interest Election Request

AMENDED AND RESTATED SENIOR SECURED REVOLVING CREDIT

AGREEMENT dated as of August 4, 2016 (this “Agreement”), among NORTHPORT TRS, LLC, as Borrower (the “Borrower”), the LENDERS party hereto (the “Lenders”), JPMORGAN CHASE BANK, N.A. as Administrative Agent and ING CAPITAL LLC, as Syndication Agent.

The Borrower, Resource Capital Corp., the “Lenders” party thereto (the “ExistingLenders”) and the Administrative Agent are parties to a Senior Secured Revolving Credit Agreement dated as of September 18, 2014 (as amended, restated, supplemented or otherwise modified from time to time before the date hereof, the “Existing Credit Facility”).

Upon the payment in full of the loans and other obligations owing to the Existing Lenders under the Existing Credit Facility, (w) the commitment of the Existing Lender not a party hereto (the “Retiring Lender”) under the Existing Credit Facility will correspondingly be terminated and such Existing Lender will cease to be a “Lender” under the Existing Credit Facility as of the Restatement Effective Date, (x) each of the Existing Lenders party hereto shall become a “Lender” under this Agreement (each, a “Continuing Lender”) and (y) each of the lenders party hereto (other than the Continuing Lenders) (each, a “New Lender”) shall become a “Lender” under this Agreement.

The Borrower has requested that the Lenders provide the credit facilities

described herein under this Agreement to extend credit to the Borrower in Dollars during the Availability Period (as defined below) in an aggregate principal or stated amount not in excess of

$180,000,000 at any time outstanding, the proceeds of which will be used in accordance with Section 5.09. The Lenders are prepared to amend and restate the Existing Credit Facility in the

    iv

#4841-8625-7971v16

form hereof, and to extend credit upon the terms and conditions hereof, and, accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01.Defined Terms. As used in this Agreement, the following

terms have the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, bear interest at a rate determined by reference to the Alternate Base Rate.

“Acquisition” means the acquisition by the Buyer of all of the issued and

outstanding limited liability company interests of the Borrower.

“Acquisition Agreement” has the meaning assigned to such term in Section 4.01(l).

“Additional Debt Amount” means, as of any date, the greater of (i) $5,000,000

and (ii) 5% of Borrower’s Shareholders’ Equity.

“Adjusted LIBO Rate” means, for the Interest Period for any Eurocurrency Borrowing, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the Eurocurrency Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate for such Interest Period.

“Adjusted Portfolio Investments Amount” means, at any date on which the

Borrowing Base is determined, the aggregate Value of all Portfolio Investments included in such

Borrowing Base, excluding the four Portfolio Investments included therein having the largest Value; provided that, for the foregoing purposes, Portfolio Investments issued by one or more members of any one consolidated group of corporations or other entities in accordance with GAAP shall be treated as a single Portfolio Investment.

“Administrative Agent” means JPMCB, in its capacity as administrative agent for

the Lenders hereunder.

“Administrative Agent’s Account” means an account designated by the Administrative Agent in a notice to the Borrower and the Lenders.

“Administrative Questionnaire” means an administrative questionnaire in a form

supplied by the Administrative Agent.

    1

#4841-8625-7971v16

“Advance Rate” has the meaning assigned to such term in Section 5.13.

“Affiliate” means, with respect to a specified Person, another Person that directly,

or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. Anything herein to the contrary notwithstanding, the term “Affiliate” shall not include any Person that constitutes an Investment held by any Obligor in the ordinary course of business. In no event shall the Agent or any Lender be deemed an Affiliate of the Borrower or any of its Subsidiaries as a result of their relationship under this Agreement.

“Affiliate Agreements” meansany agreement between the Borrower or any of its Subsidiaries, on the one hand, and any of their Affiliates, on the other hand.

“Aggregate First Lien Contribution” has the meaning assigned to such term in Section 5.13(f).

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest

of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 1/2 of 1% and (c) the rate per annum equal to 1% plus the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, on such day (or if such day is not a Business Day, the immediately preceding Business Day), for Dollar deposits with a term of one month. Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the rate appearing on Reuters Screen LIBOR01 Page (or successor or substitute therefor) as set forth above shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or such rate appearing on Reuters Screen LIBOR01 Page (or successor or substitute therefor), respectively.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction

applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Anti-Money Laundering Laws” has the meaning given in Section 3.07(c).

“Applicable Lending Office” means, for each Lender, the office of such Lender (or of a branch or affiliate of such Lender) designated for its Loans in its Administrative Questionnaire or such other office of such Lender (or of an affiliate or branch of such Lender) as such Lender may from time to time specify to the Borrower as the office by which its Loans to the Borrower are to be made and maintained.

“Applicable Margin” means, for any day, the Applicable Margin set forth below

    2

#4841-8625-7971v16

based on the aggregate number of Portfolio Investments held by the Obligors and the percentage of the Borrowing Base attributable to the Aggregate First Lien Contribution:

Number of Portfolio Investments	Percentage of the Aggregate First Lien Contribution to the Borrowing Base	Applicable Margin
Greater than or equal to 12	Not applicable	With respect to any ABR Loan, 2.00% and in the case of any Eurocurrency Loan, 3.00%
Less than 12	Greater than or equal to 65%	With respect to any ABR Loan, 2.25% and in the case of any Eurocurrency Loan, 3.25%
Less than 12	Less than 65%	With respect to any ABR Loan, 2.50% and in the case of any Eurocurrency Loan, 3.50%

“Applicable Percentage” means, with respect to any Lender, the percentage of the

total Commitments represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

“Approved Dealer” means (a) in the case of any Portfolio Investment that is not a

U.S. Government Security, a bank or a broker-dealer registered under the Securities Exchange

Act of 1934 of nationally recognized standing or an Affiliate thereof, (b) in the case of a

U.S. Government Security, any primary dealer in U.S. Government Securities, and (c) in the case of any foreign Portfolio Investment, any foreign broker-dealer of internationally recognized standing or an Affiliate thereof, in the case of each of clauses (a), (b) and (c) above, as set forth on Schedule VII or any other bank or broker-dealer acceptable to the Administrative Agent in its reasonable determination.

“Approved Pricing Service” means a pricing or quotation service as set forth in

Schedule VII or any other pricing or quotation service approved by the Board of Directors of the Borrower and designated in writing to the Administrative Agent (which designation shall be accompanied by a copy of a resolution of the Board of Directors of the Borrower that such pricing or quotation service has been approved by the Borrower).

“Approved Third Party Appraiser” means each of (a) Duff & Phelps, (b) Houlihan Lokey, (c) Lincoln Advisors, (d) Murray, Devine & Co., (e) Valuation Research Corporation and (f) any other third party appraiser selected by the Borrower in its reasonable discretion.

“Asset Coverage Ratio” means the ratio, determined on a consolidated basis,

    3

#4841-8625-7971v16

without duplication, in accordance with GAAP, of (a) the value of total assets of the Borrower and its Subsidiaries, less all liabilities (other than outstanding Indebtedness, including outstanding Indebtedness hereunder) of the Borrower and its Subsidiaries, to (b) the aggregate amount of Indebtedness of the Borrower and its Subsidiaries.

“Asset Sale” means a sale, sale and leaseback, assignment, conveyance, transfer

or other disposition to, or any exchange of property with, any Person, in one transaction or a series of transactions, of all or any part of any Obligor’s assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired; provided, however, the term “Asset Sale” as used in this Agreement shall not include (i) the transfer of certain portfolio investments to New NP, LLC in connection with the

Acquisition, immediately prior to (or concurrently with) the closing on the Restatement Effective Date or (ii) any sale, assignment, conveyance, transfer or other disposition, or exchange of property, in one transaction or a series of transactions, among any Obligors.

“Assignment and Assumption” means an Assignment and Assumption entered

into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

“Availability Period” means the period from and including the Restatement Effective Date to but excluding the earlier of the Commitment Termination Date and the date of termination of the Commitments.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers

by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country

implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Basel III” means the agreements on capital requirements, leverage ratio and

liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower” means Northport TRS, LLC, a Delaware limited liability company.

    4

#4841-8625-7971v16

“Borrower Material Indebtedness” means (a) Indebtedness (other than the Loans, Hedging Agreements and total return swaps) of any one or more of the Borrower and its Subsidiaries in an aggregate outstanding principal amount exceeding $5,000,000, (b) obligations in respect of one or more Hedging Agreements under which the maximum aggregate amount (giving effect to any netting agreements) that one or more of the Borrower and its Subsidiaries would be required to pay if such Hedging Agreement(s) were terminated at such time would exceed $5,000,000, and (c) obligations of one or more of the Borrower and its Subsidiaries in respect of any total return swap under which the outstanding notional value less all of the collateral supporting such total return swap at such time would exceed $5,000,000.

“Borrowing” means (a) all ABR Loans made, converted or continued on the same

date and/or (b) all Eurocurrency Loans that have the same Interest Period, as applicable.

“Borrowing Base” has the meaning assigned to such term in Section 5.13.

“Borrowing Base Certificate” means a certificate of a Financial Officer of the Borrower, substantially in the form of Exhibit C and appropriately completed.

“Borrowing Base Deficiency” means, at any date on which the same is

determined, the greater of the amounts, if any, by which the aggregate Covered Debt Amount as of such date exceeds either (a) the Borrowing Base as of such date or (b) the Adjusted Portfolio Investments Amount as of such date.

“Borrowing Request” means a request by the Borrower for a Borrowing in

accordance with Section 2.03 substantially in the form of Exhibit D.

“Business Day” means any day that is not a Saturday, Sunday or other day on

which commercial banks in New York City are authorized or required by law to remain closed; and when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude any day on which banks are not open for general business in London.

“Buyer” means CVC Credit Partners U.S. Lending I, L.P., a limited partnership

managed by CVC Credit Partners, LLC as investment manager, controlled by CVC Credit Partners U.S. Lending I GP, LLC, as general partner, and with Coller Partners 708 LP Incorporated and CVC Credit Partners, LLC as limited partners.

“Capital Lease Obligations” of any Person means the obligations of such Person

to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. Notwithstanding any other provision contained herein, any change in GAAP that would require an operating lease to be treated similar to a capital lease should not be given effect hereunder.

    5

#4841-8625-7971v16

“Cash” means any immediately available funds in Dollars or in any currency

other than Dollars which is a freely convertible currency.

“Cash Equivalents” means investments (other than Cash) that are one or more of

the following obligations:

(a)U.S. Government Securities, in each case maturing within one year from the date of acquisition thereof;

(b)investments in commercial paper or other short-term corporate obligations maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, a credit rating of at least A-1 from S&P and at least P-1 from Moody’s;

(c)investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof (i) issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof, provided that such certificates of deposit, banker’s acceptances and time deposits are held in a securities account (as defined in the Uniform Commercial Code) through which the Collateral Agent can perfect a security interest therein and (ii) having, at such date of acquisition, a credit rating of at least A-1 from S&P and at least P-1 from Moody’s;

(d)fully collateralized repurchase agreements with a term of not more than 30 days from the date of acquisition thereof for U.S. Government Securities and entered into with (i) a financial institution satisfying the criteria described in clause (c) of this definition or (ii) an Approved Dealer having (or being a member of a consolidated group having) at such date of acquisition, a credit rating of at least A-1 from S&P and at least P-1 from Moody’s;

(e)a Reinvestment Agreement issued by any bank (if treated as a deposit by such bank), or a Reinvestment Agreement issued by any insurance company or other corporation or entity, in each case, at the date of such acquisition having a credit rating of at least A-1 from S&P and at least P-1 from Moody’s; provided that such Reinvestment Agreement may be unwound at the option of the Borrower at any time without penalty; and

(f)money market funds that have, at all times, credit ratings of “Aaa” and

“MR1+” by Moody’s and “AAAm” or “AAAm-G” by S&P, respectively;

provided, that (i) in no event shall Cash Equivalents include any obligation that provides for the payment of interest alone (for example, interest-only securities or “IOs”); (ii) if any of Moody’s or S&P changes its rating system, then any ratings included in this definition shall be deemed to

    6

#4841-8625-7971v16

be an equivalent rating in a successor rating category of Moody’s or S&P, as the case may be; (iii) Cash Equivalents (other than U.S. Government Securities or repurchase agreements) shall not include any such investment of more than 10% of total assets of the Obligors in any single issuer; and (iv) in no event shall Cash Equivalents include any obligation that is not denominated in Dollars.

“Change in Control” means (A) more than 50% of the economic or voting rights

of CVC Credit Partners, LLC are no longer held or exercised, whether directly or indirectly, by a member of CVC or a Qualifying Person, (B) CVC Credit Partners, LLC or its Affiliates ceases to directly, or indirectly manage or control the Buyer, (C) Coller International Partners VII, L.P. and/or its Affiliates ceases to directly own or control at least 50% of the limited partnership interests in the Buyer, (D) the Buyer ceases to directly or indirectly own or control all of the limited liability company interests issued by the Borrower, or (E) the Borrower ceases, directly or indirectly, to own and control 100% of the outstanding voting equity interests issued by and the economic interest in each of the Subsidiary Guarantors.

“Change in Law” means (a) the adoption or taking effect of any law, rule,

regulation or treaty after the date of this Agreement, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in implementation thereof and (ii) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Code” means the Internal Revenue Code of 1986, as amended from time to time. “Collateral” has the meaning assigned to such term in the Guarantee and Security Agreement.

“Collateral Account” has the meaning set forth in the Custodian Agreement.

“Collateral Agent” means JPMCB in its capacity as Collateral Agent under the Guarantee and Security Agreement, and includes any successor Collateral Agent thereunder. “Collateral Pool” means, at any time, each Portfolio Investment that has been Delivered (as defined in the Guarantee and Security Agreement) to the Collateral Agent and is subject to the Lien of the Guarantee and Security Agreement, and then only for so long as such Portfolio Investment continues to be Delivered as contemplated therein and in which the Collateral Agent

    7

#4841-8625-7971v16

has a first-priority perfected Lien as security for the Secured Obligations (as defined in the Guarantee and Security Agreement), (subject to any Lien permitted by Section 6.02 hereof), provided that in the case of any Portfolio Investment in which the

Collateral Agent has a first-priority perfected security interest pursuant to a valid

Uniform Commercial Code filing (and for which no other method of perfection with a higher priority is possible), such Portfolio Investment may be included in the Borrowing Base so long as all remaining actions to complete “Delivery” are satisfied in full within 7 days of such inclusion.

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.07 or as otherwise provided in this

Agreement and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule I, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders’ Commitments is $180,000,000.

“Commitment Termination Date” means July 31, 2018.

“Competitor” means a “direct competitor” of the Borrower (or any of the Borrower’s Affiliates or Subsidiaries) as specified by the Borrower on a list, which shall not exceed 20 entities at any one time, delivered to the Administrative Agent on or prior to the Restatement Effective Date, as such list may be updated from time to time with the approval of the Administrative Agent, such approval not to be unreasonably withheld or delayed, which list (or any update thereto) shall be promptly disclosed to the Lenders.

“Continuing Lender” has the meaning set forth in the recitals.

“Control” means the possession, directly or indirectly, of the power to direct or

cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Covered Debt Amount” means, on any date, (a) all of the Revolving Credit Exposures of all Lenders on such date plus (b) the aggregate amount of any Indebtedness incurred pursuant to Section 6.01(g).

“Custodian” means U.S. Bank National Association.

“Custodian Agreement” means the Amended and Restated Custodian Agreement

    8

#4841-8625-7971v16

dated as of August 4, 2016 by and among the Borrower and U.S. Bank National Association, as custodian and as document custodian, and as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

“CVC” means CVC SIF and each of its direct and indirect subsidiaries and their

respective Affiliates, CVC Capital Partners Advisory Group Holding Foundation and each of its direct and indirect subsidiaries and their respective Affiliates, CVC Credit Partners Group Holding Foundation and each of its direct and indirect subsidiaries and each of their respective Affiliates, and the successors and assigns of the aforementioned entities (including, for the avoidance of doubt, any successor entity to which their business or assets have been transferred), but excluding Resource America and excluding the Buyer and the CVC Vehicles. For the avoidance of doubt “member of CVC” excludes the Buyer and any CVC Vehicle.

“CVC Capital Partners Advisory Group Holding Foundation” means CVC Capital Partners Advisory Group Holding Foundation, formed under the Foundations (Jersey) Law 2009 with a registered office at 22 Grenville Street St Helier Jersey, JE4 8PX.

“CVC Credit Partners Group Holding Foundation” means CVC Credit Partners Group Holding Foundation, formed under the Foundations (Jersey) Law 2009 with a registered office at 22 Grenville Street St Helier Jersey, JE4 8PX.

“CVC Executive” means a director, officer, associate, partner or employee of any

member of CVC.

“CVC SIF” means CVC Capital Partners SICAV-FIS S.A. and each of its direct

and indirect subsidiaries.

“CVC Vehicle” means any pooled investment vehicle or separate managed

account arrangement managed or advised by any member of CVC (excluding, for the avoidance of doubt, the Buyer).

“Debt Document” has the meaning assigned to such term in the Guarantee and Security Agreement.

“Default” means any event or condition which constitutes an Event of Default or

which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Defaulting Lender” means any Lender, as determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans within three Business Days of the date required to be funded by it hereunder, unless, in the case of any Loans, such Lender’s failure is based on such Lender’s reasonable determination that the conditions precedent to funding such Loan under this Agreement have not been met, such conditions have not otherwise been waived in accordance with the terms of this Agreement and such Lender has advised the Administrative

    9

#4841-8625-7971v16

Agent in writing (with reasonable detail of those conditions that have not been satisfied) prior to the time at which such funding was to have been made, (b) notified the Borrower, the

Administrative Agent or any Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default shall be specifically identified in such writing or public statement) cannot be satisfied), (c) failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, (e) (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or (f) become, or has a parent company that has become, the subject of a Bail-In Action; provided that, for the avoidance of doubt, a Lender shall not be a Defaulting Lender solely by virtue of (i) the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority or (ii) in the case of a solvent Person, the precautionary appointment of an administrator, guardian, custodian or other similar official by a Governmental Authority under or based on the law of the country where such Person is subject to home jurisdiction supervision if applicable law requires that such appointment not be publicly disclosed in any such case, where such action does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

“Disqualified Equity Interests” means stock of the Borrower that after its issuance

is subject to any agreement between the holder of such stock and the Borrower where the Borrower is required to purchase, redeem, retire, acquire, cancel or terminate all such stock, other than (x) as a result of a change of control or asset sale or (y) in connection with any purchase, redemption, retirement, acquisition, cancellation or termination with, or in exchange for, shares of stock.

    10

#4841-8625-7971v16

“Dollars” or “$” refers to lawful money of the United States of America. “EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Equity Interests” means shares of capital stock, partnership interests,

membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest. As used in this Agreement, “Equity Interests” shall not include convertible debt unless and until such debt has been converted to capital stock.

“ERISA” means the Employee Retirement Income Security Act of 1974, as

amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that,

together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event,” as defined in Section 4043(c)

of ERISA with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standards (set forth in Sections 412 and 430 of the Code or Sections 302 and 303 of ERISA) applicable to such Plan; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan under Section 4041 of ERISA or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (f) the incurrence by the Borrower or any ERISA Affiliates of any liability with respect to a withdrawal from a Plan subject to Section 4063 of ERISA during a plan year in which it was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA), a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA or a

    11

#4841-8625-7971v16

“complete withdrawal” or “partial withdrawal” (within the meanings of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice (not issued in error) from any Multiemployer Plan concerning the imposition of Withdrawal Liability on the Borrower or any ERISA Affiliate or a determination that a Multiemployer Plan is “insolvent” (within the meaning of Section 4245 of ERISA) or in “reorganization” (within the meaning of Section 4241 of ERISA).

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule

published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Eurocurrency”, when used in reference to any Loan or Borrowing, refers to

whether such Loan, or the Loans constituting such Borrowing are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Eurocurrency Rate” means, with respect to any Eurocurrency Borrowing and for

any applicable Interest Period, the LIBOR Screen Rate as of the Specified Time on the Quotation Day for such Interest Period, providedthat if the applicable Screen Rate shall not be available for such Interest Period with respect to such Eurocurrency Borrowing for any reason, then, subject to Section 2.12, the applicable Reference Bank Rate shall be the Eurocurrency Rate for such Interest Period for such Eurocurrency Borrowing, and provided further, that, if the Eurocurrency Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Event of Default” has the meaning assigned to such term in Article VII.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender

or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, or that are Other Connection Taxes, (b) any branch profits taxes imposed by the United States of America or by any other jurisdiction in which the Borrower is located, (c) in the case of a Lender (other than an assignee pursuant to a request by the Borrower under Section 2.19(b)), any withholding tax that is imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16(a), (d) any United States federal withholding Taxes imposed under FATCA and

(e) any Tax imposed as a result of the Administrative Agent’s or such Lender’s failure or inability to comply with Sections 2.16(e), (f) or (g).

“Existing Credit Facility” has the meaning assigned to such term in the preamble

    12

#4841-8625-7971v16

to this Agreement.

“Extraordinary Receipts” means any cash received by or paid to or for the account

of any Obligor, with respect to any foreign, United States, state or local tax refunds, pension plan reversions, judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustment received in connection with any purchase agreement and proceeds of insurance (excluding, however, for the avoidance of doubt, proceeds of any issuance of Equity Interests by the Borrower and issuances of Indebtedness by any Obligor or any Asset Sales); provided, however, that Extraordinary Receipts shall not include any (x) amounts that the Borrower receives from the Administrative Agent or any Lender pursuant to Section 2.16(h), or (y) cash receipts to the extent received from proceeds of insurance, condemnation awards (or payments in lieu thereof), indemnity payments or payments in respect of judgments or settlements of claims, litigation or proceedings to the extent that such proceeds, awards or payments are received by any Person in respect of any claim against or loss by such Person and promptly applied to pay (or to reimburse such Person for its prior payment or incurrence of) such claim or loss and the costs and expenses of such Person with respect thereto. “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or official practices adopted pursuant to any published intergovernmental agreement entered into in connection with the implementation of such sections of the Code.

“Federal Funds Effective Rate” means, for any day, the rate calculated by the

NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as the NYFRB shall set forth on its public website (https://www.newyorkfed.org) from time to time, and published on the next succeeding Business Day by the NYFRB as the federal funds effective rate; provided that if the Federal Funds Effective Rate shall be less than zero, the Federal Funds Effective Rate shall be deemed to be zero for purposes of this Agreement.

“Financial Indebtedness” of a Person means Indebtedness of the type that appears

as “debt” upon a consolidated balance sheet (excluding the footnotes thereto) of such Person and its Subsidiaries prepared in accordance with GAAP.

“Financial Officer” means the president, any senior vice president, chief financial

officer, principal accounting officer, chief accounting officer, treasurer, assistant treasurer, controller or assistant controller of the Borrower, or any officer of the Borrower who is authorized to sign all documentation and execute all agreements relating to financial reporting on behalf of the Borrower.

    13

#4841-8625-7971v16

“Foreign Lender” means any Lender that is not a “United States person” as

defined under Section 7701(a)(30) of the Code.

“GAAP” means generally accepted accounting principles in the United States of America.

“Governmental Authority” means the government of the United States of America, or of any other nation, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national body exercising such powers or functions, such as the European Union or the European Central Bank).

“Guarantee” of or by any Person (the “guarantor”) means any obligation,

contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or customary indemnification agreements entered into in the ordinary course of business in connection with obligations that do not constitute Indebtedness. The amount of any Guarantee at any time shall be deemed to be an amount equal to the maximum stated or determinable amount of the primary obligation in respect of which such Guarantee is incurred, unless the terms of such Guarantee expressly provide that the maximum amount for which such Person may be liable thereunder is a lesser amount (in which case the amount of such Guarantee shall be deemed to be an amount equal to such lesser amount).

“Guarantee and Security Agreement” means that certain Amended and Restated Guarantee and Security Agreement dated as of August 4, 2016 among the Borrower, the Subsidiary Guarantors, the Administrative Agent and the Collateral Agent.

“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement

substantially in the form of Exhibit A to the Guarantee and Security Agreement between the Administrative Agent and an entity that, pursuant to Section 5.08 is required to become a “Subsidiary Guarantor” under the Guarantee and Security Agreement (with such changes as the Administrative Agent shall request, consistent with the requirements of Section 5.08).

    14

#4841-8625-7971v16

“Guaranteed Obligations” has the meaning assigned to such term in the Guarantee

and Security Agreement.

“Hedging Agreement” means any interest rate protection agreement, foreign

currency exchange protection agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

“Indebtedness” of any Person means, without duplication, (a) all obligations of

such Person (i) for borrowed money or (ii) with respect to deposits or advances of any kind that are required to be accounted for under GAAP as a liability on the financial statements of such Person (other than deposits received in connection with a Portfolio Investment in the ordinary course of such Person’s business (including, but not limited to, any deposits or advances in connection with expense reimbursement, prepaid agency fees, other fees, indemnification, work fees, tax distributions or purchase price adjustments)), (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable and accrued expenses incurred in the ordinary course of business), (e) all Indebtedness of others secured by any Lien (other than a Lien permitted by Section 6.02(c)) on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (with the value of such debt being the lower of the outstanding amount of such debt and the fair market value of the property subject to such Lien), (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances and (j) all Disqualified Equity Interests. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, “Indebtedness” shall not include (x) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset or Investment to satisfy unperformed obligations of the seller of such asset or Investment, (y) a commitment arising in the ordinary course of business to make a future Portfolio Investment, or

(z) any accrued incentive, management or other fees to the Borrower’s investment manager or Affiliates (regardless of any deferral in payment thereof).

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or

with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Independent Valuation Provider” means an independent third-party valuation

    15

#4841-8625-7971v16

firm, including, Murray, Devine & Co., Houlihan Lokey, Duff & Phelps, Lincoln Advisors, Valuation Research Corporation, Alvarez & Marsal and any other person reasonably acceptable to the Borrower and the Administrative Agent.

“Industry Classification Group” means (a) any of the Moody’s classification

groups set forth in Schedule VI hereto, together with any such classification groups that may be subsequently established by Moody’s and provided by the Borrower to the Administrative Agent and (b) up to three additional industry group classifications established by the Borrower pursuant to Section 5.12.

“Interest Election Request” means a request by the Borrower to convert or

continue a Borrowing in accordance with Section 2.06 substantially in the form of Exhibit E.

“Interest Payment Date” means (a) with respect to any ABR Loan, each Quarterly Date and (b) with respect to any Eurocurrency Loan, the last day of each Interest Period therefor and, in the case of any Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at three-month intervals after the first day of such Interest Period.

“Interest Period” means with respect to any Eurocurrency Borrowing the period

commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Loan is made and, thereafter, shall be the effective date of the most recent conversion or continuation of such Loan, and the date of a Borrowing comprising Loans that have been converted or continued shall be the effective date of the most recent conversion or continuation of such Loans.

“Investment” means, for any Person: (a) Equity Interests, bonds, notes,

debentures or other securities of any other Person or any agreement to acquire any Equity Interests, bonds, notes, debentures or other securities of any other Person (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (b) deposits, advances, loans or other extensions of credit made to any other Person (including purchases of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person, but excluding any advances to employees, officers, directors and consultants of the Borrower or any of its

    16

#4841-8625-7971v16

Subsidiaries for travel, entertainment, business and moving expenses and other similar expenses in the ordinary course of business); or (c) Hedging Agreements.

“Investment Company Act” means the Investment Company Act of 1940, as

amended from time to time.

“Investment Policies” has the meaning assigned to such term in Section 3.11(b).

“JPMCB” means JPMorgan Chase Bank, N.A.

“Joint Lead Arrangers” means JPMCB and ING Capital LLC.

“Lenders” has the meaning assigned to such term in the preamble to this Agreement.

“LIBOR” means the rate at which deposits denominated in Dollars are offered to

leading banks in the London interbank market.

“LIBOR Screen Rate” means the London interbank offered rate administered by

the ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for Dollars for a period equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen or, in the event such rate does not appear on either of such Reuters pages, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall be selected by the Administrative Agent from time to time in its reasonable discretion; provided, that, if any LIBOR Screen Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,

pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities (other than on market terms at fair value so long as in the case of any Portfolio Investment, the Value used in determining the Borrowing Base is not greater than the call price), except in favor of the issuer thereof (and, for the avoidance of doubt, in the case of Investments that are loans or other debt obligations, customary restrictions on assignments or transfers thereof pursuant to the underlying documentation of such Investment shall not be deemed to be a “Lien” and, in the case of Portfolio Investments that are equity securities, excluding customary drag-along, tag-along, right of first refusal and other similar rights in favor of other equity holders of the same issuer).

    17

#4841-8625-7971v16

“Limited Partnership Agreement” means that certain Amended and Restated Agreement of Limited Partnership of CVC Credit Partners U.S. Lending I, L.P. dated August 1, 2016.

“Loan Documents” means, collectively, this Agreement and the Security Documents.

“Loans” means the loans made by the Lenders to the Borrower pursuant to Section 2.01.

“Margin Stock” means “margin stock” within the meaning of Regulations T, U

and X of the Board of Governors of the Federal Reserve System.

“Material Adverse Effect” means a material adverse effect on (a) the business,

Portfolio Investments and other assets, liabilities and financial condition of the Borrower and its

Subsidiaries taken as a whole (excluding in any case a decline in the net asset value of the Borrower or a change in general market conditions or values of the Investments of the Borrower and its Subsidiaries), or (b) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent and the Lenders thereunder.

“Maturity Date” means the earliest to occur of (a) July 31, 2020 (as such date may

be extended in accordance with Section 2.20) and (b) the date on which the Commitments have been terminated and the aggregate amount of Loans outstanding has been repaid in full and all other obligations of the Borrower hereunder have been paid in full (other than any Unasserted Contingent Obligations).

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto. “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate makes any contributions.

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount

equal to (i) the sum of Cash payments and Cash Equivalents received by the Obligors from such Asset Sale (including any Cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received), minus (ii) (w) any costs, fees, commissions, premiums and expenses incurred by any Obligor directly incidental to such Asset Sale, (x) any accrued interest and compensation with respect to a delayed settlement for such Asset Sale, (y) all taxes paid or reasonably estimated to be payable by the Borrower or by the relevant Subsidiaries or other Affiliates as a result of such Asset Sale (after taking into account any available tax credits or deductions specifically relating to such Asset Sale), and (z) reserves for indemnification, purchase price adjustments or analogous arrangements reasonably estimated by the Borrower or the relevant Subsidiary in connection with such Asset Sale; provided that, if the amount of any estimated reserves pursuant to this clause (z) exceeds the amount actually required to be paid in cash in respect of

    18

#4841-8625-7971v16

indemnification, purchase price adjustments or analogous arrangements for such Asset Sale, the aggregate amount of such excess shall constitute Net Asset Sale Proceeds (as of the date the Borrower determines such excess exists).

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Banking Day, for the immediately preceding Banking Day); provided that if neither of such rates is published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m., New York City time, on such day received to the Administrative Agent from a Federal funds broker of recognized standing selected by it in its reasonable discretion; provided, further, that if any of the aforesaid rates shall be less than zero, the NYFRB Rate shall be deemed to be zero for purposes of this Agreement.

“Obligor” means, collectively, the Borrower and the Subsidiary Guarantors.

“Other Connection Taxes” means, with respect to any recipient of any payment to

be made by or on account of any obligation of the Borrower hereunder, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Permitted Indebtedness” means (a) accrued expenses and current trade

accounts payable incurred in the ordinary course of any Obligor’s business which are not overdue for a period of more than 90 days or which are being contested in good faith by appropriate proceedings, (b) Indebtedness (other than Indebtedness for borrowed money) arising in connection with transactions in the ordinary course of any Obligor’s business in connection with its purchasing of securities, derivatives transactions, reverse repurchase agreements or dollar rolls to the extent such transactions are permitted under the Investment Company Act and the Investment Policies, provided that such Indebtedness does not arise in connection with the purchase of Portfolio Investments other than Cash Equivalents and U.S. Government Securities and (c) Indebtedness in respect of judgments or awards so long as such judgments or awards do not constitute an Event of Default under clause (l) of Article VII.

“Other Taxes” means any and all present or future stamp, court or documentary,

intangible, recording, filing or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19(b)).

    19

#4841-8625-7971v16

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both

overnight federal funds and overnight Eurodollar transactions by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).

“PBGC” means the Pension Benefit Guaranty Corporation as referred to and

defined in ERISA and any successor entity performing similar functions.

“Permitted Equity Interests” means stock of the Borrower that does not constitute Disqualified Equity Interests.

“Permitted Liens” means: (a) Liens imposed by any Governmental Authority for

taxes, assessments or charges not yet due or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower in accordance with GAAP; (b) Liens of clearing agencies, broker-dealers and similar Liens incurred in the ordinary course of business, provided that such Liens (i) attach only to the securities (or proceeds) being purchased or sold and (ii) secure only obligations incurred in connection with such purchase or sale, and not any obligation in connection with margin financing; (c) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmens’, landlord, storage and repairmen’s Liens and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money); (d) Liens incurred or pledges or deposits made to secure obligations incurred in the ordinary course of business under workers’ compensation laws, unemployment insurance or other similar social security legislation (other than Liens in respect of employee benefit plans arising under ERISA or Section 4975 of the Code) or to secure public or statutory obligations; (e) Liens securing the performance of, or payment in respect of, bids, insurance premiums, deductibles or co-insured amounts, tenders, government or utility contracts (other than for the repayment of borrowed money), surety, stay, customs and appeal bonds and other obligations of a similar nature incurred in the ordinary course of business, provided that all Liens on any Collateral included in the Borrowing Base that is permitted pursuant to this clause (e) shall have a priority that is junior to the Liens under the Security Documents; (f) Liens arising out of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as such judgments or awards do not constitute an Event of Default under clause (l) of Article VII; (g) customary rights of setoff, banker’s lien, security interest or other like right upon (i) deposits of cash in favor of banks or other depository institutions in which such cash is maintained in the ordinary course of business, (ii) cash and financial assets held in securities accounts in favor of banks and other financial institutions with which such accounts are maintained in the ordinary course of business and (iii) assets held by a custodian in favor of such custodian in the ordinary course of business securing payment of fees, indemnities and other similar obligations, provided that such rights are subordinated, pursuant to the terms of the Custodian Agreement, to the first priority perfected security interest in the Collateral created in favor of the Collateral Agent, except to the

    20

#4841-8625-7971v16

extent expressly provided in the Guarantee and Security Agreement; (h) Liens arising solely from precautionary filings of financing statements under the Uniform Commercial Code of the applicable jurisdictions in respect of operating leases entered into by the Borrower or any of its Subsidiaries in the ordinary course of business; (i) deposits of money that are not Collateral made in the ordinary course of business to secure leases to which any Obligor is a party as a lessee; (j) easements, rights of way, zoning restrictions and similar encumbrances on real property and minor irregularities in the title thereto that do not interfere with or affect in any material respect the ordinary course conduct of the business of the Borrower and its Subsidiaries; (k) Liens in favor of any escrow agent solely on and in respect of any cash earnest money deposits made by any Obligor in connection with any letter of intent or purchase agreement (to the extent that the acquisition or disposition with respect thereto is otherwise permitted hereunder); and (l) precautionary Liens, and filings of financing statements under the Uniform Commercial Code, covering assets sold or contributed to any Person not prohibited hereunder.

“Person” means any natural person, corporation, limited liability company, trust,

joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Portfolio Investment” means any Investment held by the Obligors in their asset

portfolio (and solely for purposes of determining the Borrowing Base, and of Sections 6.02(d) and 6.04(d) and clause (p) of Article VII, Cash and Cash Equivalents). Notwithstanding the foregoing, nothing herein shall limit the provisions of Section 5.12(b)(i), which provides that, for purposes of this Agreement, all determinations of whether an investment is to be included as a Portfolio Investment shall be determined on a settlement-date basis (meaning that any investment that has been purchased will not be treated as a Portfolio Investment until such purchase has settled, and any Portfolio Investment which has been sold will not be excluded as a Portfolio Investment until such sale has settled), provided that no such investment shall be included as a Portfolio Investment to the extent it has not been paid for in full.

“Prime Rate” means the rate of interest per annum publicly announced from time

to time by JPMCB as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“Qualifying Person” means (a) any current or former CVC Executive; (b) any

relative (being a spouse, former spouse, brother, sister, lineal descendant or lineal ascendant) of any person mentioned in (a); (c) the trustee of any trust the main beneficiary or beneficiaries of which are persons described in (a) and/or (b); and (d) any company or arrangement creating

    21

#4841-8625-7971v16

rights in the nature of ownership or co-ownership the principal interest in which is held for persons described in (a), (b) and/or (c).

“Quarterly Dates” means the last Business Day of March, June, September and December in each year.

“Quotation Day” means, with respect to any Eurocurrency Borrowing for any Interest Period, two Business Days prior to the commencement of such Interest Period.

“Quoted Investments” has the meaning set forth in Section 5.12(b)(ii)(A).

“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards

to four decimal places) supplied to the Administrative Agent at its request by the Reference Banks (as the case may be) as of the Specified Time on the Quotation Day for Loans in Dollars and the applicable Interest Period; provided, that, if any Reference Bank Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Reference Banks” means such banks as may be appointed by the Administrative Agent in consultation with the Borrower.

“Register” has the meaning set forth in Section 9.04.

“Regulations T, U and X” means, respectively, Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

“Reinvestment Agreement” means a guaranteed reinvestment agreement from a

bank, insurance company or other corporation or entity having a credit rating of at least A-1 from S&P and at least P-1 from Moody’s; provided that such agreement provides that it is terminable by the purchaser, without penalty, if the rating assigned to such agreement by either S&P or Moody’s is at any time lower than such ratings.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, partners, trustees, administrators, employees, agents, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“Required Lenders” means, at any time, Lenders having Revolving Credit

Exposures and unused Commitments representing more than 50% of the sum of the total

Revolving Credit Exposures and unused Commitments at such time; provided that the Revolving Credit Exposures and unused Commitments of any Defaulting Lenders shall be disregarded in the determination of Required Lenders to the extent provided for in Section 2.18.

“Resource America” means Resource America Inc., a Delaware corporation,

    22

#4841-8625-7971v16

together with its Affiliates, including any funds, investment vehicles and accounts managed by such entities or persons.

“Restatement Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Restricted Payment” means any dividend or other distribution (whether in cash,

securities or other property) with respect to any shares of any class of capital stock of the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower or any option, warrant or other right to acquire any such shares of capital stock of the Borrower (other than any equity awards granted to employees, officers, directors and consultants of the Borrower or any of its Affiliates), provided, for clarity, neither the conversion of convertible debt into capital stock nor the purchase, redemption, retirement, acquisition, cancellation or termination of convertible debt made solely with capital stock (other than interest, which may be payable in cash) shall be a Restricted Payment hereunder.

“Retiring Lender” has the meaning set forth in the recitals.

“Return of Capital” means any return of capital received by the Obligors in

respect of any Portfolio Investment, including, without limitation, any amount received in respect of principal (whether at stated maturity, by acceleration or otherwise) and any net cash proceeds of the sale of any property or assets pledged as collateral in respect of such Portfolio Investment to the extent the Obligor is permitted to retain all such proceeds (under law or contract) minus all taxes paid or reasonably estimated to be payable by the Borrower or the relevant Subsidiaries or other Affiliates as a result of such return of capital or receipt of proceeds (after taking into account any available tax credits or deductions).

“Revolving Credit Exposure” means, with respect to any Lender at any time, the

sum of the outstanding principal amount of such Lender’s Loans at such time made or incurred under the Commitments.

“S&P” means S&P Global Ratings, a division of S&P Global Inc., a New York

corporation, or any successor thereto.

“Sanctioned Country” means, at any time, a country or territory which is itself the

subject or target of any Sanctions (at the time of this Agreement, Cuba, Iran, North Korea, Sudan and Syria).

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-

related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in

    23

#4841-8625-7971v16

a Sanctioned Country or (c) any Person majority owned or Controlled by any such Person or Persons.

“Sanctions” means economic or financial sanctions or trade embargoes imposed,

administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

“Screen Rate” means the LIBOR Screen Rate.

“Secured Party” has the meaning set forth in the Guarantee and Security Agreement.

“Security Documents” means, collectively, the Guarantee and Security

Agreement, all Uniform Commercial Code financing statements filed with respect to the security interests in personal property created pursuant to the Guarantee and Security Agreement and all other assignments, pledge agreements, security agreements, intercreditor agreements, control agreements and other instruments executed and delivered at any time by any of the Obligors pursuant to the Guarantee and Security Agreement or otherwise providing or relating to any collateral security for any of the Secured Obligations under and as defined in the Guarantee and Security Agreement.

“Shareholders’ Equity” means, at any date, the amount determined on a

consolidated basis, without duplication, in accordance with GAAP, of shareholders’ equity for any Person at such date.

“Special Equity Interest” means any Equity Interest that is subject to a Lien in

favor of creditors of the issuer of such Equity Interest, provided that (a) such Lien was created to secure Indebtedness owing by such issuer to such creditors, (b) such Indebtedness was (i) in existence at the time the Obligors acquired such Equity Interest, (ii) incurred or assumed by such issuer substantially contemporaneously with such acquisition or (iii) already subject to a Lien granted to such creditors and (c) unless such Equity Interest is not intended to be included in the Collateral, the documentation creating or governing such Lien does not prohibit the inclusion of such Equity Interest in the Collateral.

“Specified Time” means 11:00 a.m., London time.

“Statutory Reserve Rate” means, for the Interest Period for any Eurocurrency Borrowing, a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the arithmetic mean, taken over each day in such Interest Period, of the aggregate of the applicable maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently

    24

#4841-8625-7971v16

referred to as “Eurocurrency liabilities” in Regulation D). Such reserve percentages shall include those imposed pursuant to Regulation D. Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any

corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more

than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Anything herein to the contrary notwithstanding, the term “Subsidiary” shall not include any Person that constitutes an Investment held by any Obligor in the ordinary course of business. Unless otherwise specified, “Subsidiary” means a Subsidiary of the Borrower.

“Subsidiary Guarantor” means each Subsidiary of the Borrower.

“Syndication Agent” means ING Capital LLC, in its capacity as syndication agent

hereunder.

“Taxes” means any and all present or future taxes, levies, imposts, duties,

deductions, charges or withholdings (including backup withholding), assessments or fees imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Termination Date” means the date on which the Commitments have expired or

been terminated and the principal of and accrued interest on each Loan and all fees and other amounts payable hereunder (other than Unasserted Contingent Obligations) shall have been paid in full.

“Transactions” means the execution, delivery and performance by the Borrower

of this Agreement and the other Loan Documents, the borrowing of Loans and the use of the proceeds thereof.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the

rate of interest on such Loan, or on the Loans constituting such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

    25

#4841-8625-7971v16

“Unadjusted Eligible Portfolio Investments” means all Portfolio Investments

eligible for inclusion in the Borrowing Base, as determined prior to taking into account any reductions in the Advance Rates set forth in Section 5.13.

“Unasserted Contingent Obligations” means all (i) unasserted contingent

indemnification obligations not then due and payable and (ii) unasserted expense reimbursement obligations (including without limitation, any obligations under Sections 2.14, 2.16 or 9.03) not then due and payable.

“Uniform Commercial Code” means the Uniform Commercial Code as in effect

from time to time in the State of New York.

“Unquoted Investments” has the meaning set forth in Section 5.12(b)(ii)(B).

“U.S. Government Securities” means securities that are direct obligations of, and

obligations the timely payment of principal and interest on which is fully guaranteed by, the United States or any agency or instrumentality of the United States the obligations of which are backed by the full faith and credit of the United States and in the form of conventional bills, bonds, and notes.

“Valuation Policy” has the meaning assigned to such term in Section 5.12(b)(ii)(B).

“Value” has the meaning assigned to such term in Section 5.13.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a “complete withdrawal” or “partial withdrawal” from such Multiemployer Plan, as such terms are defined in Sections 4203 and 4205 of ERISA.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

SECTION 1.02.Classification of Loans and Borrowings. For purposes of

this Agreement, Loans and Borrowings may be classified and referred to by Type (e.g., an “ABR Loan” or an “ABR Borrowing”).

SECTION 1.03.Terms Generally. The definitions of terms herein shall

apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any

    26

#4841-8625-7971v16

agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, amended and restated, supplemented, renewed or otherwise modified (subject to any restrictions on such amendments, supplements, renewals or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. For the avoidance of doubt, any cash payment (other than any cash payment on account of interest) made by the Borrower in respect of any conversion features in any convertible securities that may be issued by the Borrower shall constitute a “regularly scheduled payment, prepayment or redemption of principal and interest” within the meaning of clause (a) of Section 6.12.

SECTION 1.04.Accounting Terms; GAAP. Except as otherwise expressly

provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Restatement Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. For all purposes of determining compliance with the terms and conditions of this Agreement, the value of assets of the Borrower shall be determined on a fair value basis. To the extent any financial statements delivered pursuant to this Agreement do not reflect the Borrower’s assets on a fair value basis, for purposes of determining compliance, relevant values in such statements shall be adjusted to reflect the fair value of the Borrower’s assets using the methodology for determining value used to calculate the Borrowing Base. For the avoidance of doubt, the financial statements of the Borrower delivered pursuant to this Agreement shall at all times be required to reflect the assets of the Borrower on a fair value basis. The Borrower covenants and agrees with the Lenders that whether or not the Borrower may at any time adopt Financial Accounting Standard No. 159 (or successor standard solely as it relates to fair valuing liabilities) or accounts for liabilities acquired in an acquisition on a fair value basis pursuant to Financial Accounting Standard No. 141(R) (or successor standard solely as it relates to fair valuing liabilities), all valuations of liabilities for purposes of determinations of compliance by the Borrower with the terms and conditions of this Agreement shall be made on the basis that the Borrower has not adopted Financial Accounting Standard No. 159 (or such successor standard solely as it relates to fair

    27

#4841-8625-7971v16

valuing liabilities) or, in the case of liabilities acquired in an acquisition, Financial Accounting Standard No. 141(R) (or such successor standard solely as it relates to fair valuing liabilities).

ARTICLE II

THE CREDITS

SECTION 2.01.The Commitments. Subject to the terms and conditions set

forth herein, each Lender agrees to make Loans in Dollars to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment, (ii) the aggregate

Revolving Credit Exposure of all of the Lenders exceeding the Commitments, or (iii) the total

Covered Debt Amount exceeding, either the Adjusted Portfolio Investments Amount or the Borrowing Base then in effect. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans.

SECTION 2.02.Loans and Borrowings.

(a) Obligations of Lenders. Each Loan shall be made as part of a Borrowing

consisting of Loans of the same Type made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Type of Loans. Subject to Section 2.12, (i) each Borrowing shall be

constituted entirely of ABR Loans or of Eurocurrency Loans. Each Lender at its option may make any Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) Minimum Amounts. Each Borrowing (whether Eurocurrency or ABR)

shall be in an aggregate amount of $1,000,000 or a larger multiple of $1,000,000 or, such smaller minimum amount as may be agreed to by the Administrative Agent; provided that a Borrowing

may be in an aggregate amount that is equal to the entire unused balance of the total Commitments. Borrowings of more than one Type may be outstanding at the same time.

(d) Limitations on Interest Periods. Notwithstanding any other provision of

this Agreement, the Borrower shall not be entitled to request (or to elect to convert to or continue as a Eurocurrency Borrowing) any Borrowing if the Interest Period requested therefor would end after the Maturity Date.

(e) Restatement Effective Date Adjustments. On the Restatement Effective

    28

#4841-8625-7971v16

Date the Borrower will borrow from each of the Lenders, and the Lenders will make Loans to the Borrower (in the case of Eurocurrency Loans, with Interest Period(s) ending on the date(s) of any then outstanding Interest Period(s) under the Existing Credit Facility), and (notwithstanding the provisions in this Agreement requiring that borrowings and prepayments be made ratably) simultaneously prepay the outstanding loans owed under the Existing Credit Facility (together with any amounts payable under Section 2.15 of the Existing Credit Facility) to each of the Existing Lenders, so that after giving effect to such Loans and prepayments, the Loans (and Interest Period(s) of Eurocurrency Loan(s)) shall be held by the Lenders pro rata in accordance with the respective amounts of their Commitments; provided that (i) the prepayment to, and borrowing from, any Continuing Lender shall be effected by book entry to the extent that any portion of the amount prepaid to such Continuing Lender under the Existing Credit Facility will be subsequently borrowed from such Continuing Lender on the Restatement Effective Date, and (ii) the Lenders shall make and receive payments among themselves, in a manner acceptable to the Administrative Agent, so that, after giving effect thereto, the Loans of each Type are held ratably by the Lenders of such Type in accordance with each Lender’s Applicable Percentage of Commitments and portion of Loans, which, for the purposes of this Agreement and each other Loan Document, will be as set forth opposite such Person’s name on Schedule I.

SECTION 2.03.Requests for Borrowings.

(a)Notice by the Borrower. To request a Borrowing, the Borrower shall

notify the Administrative Agent of such request by telephone (i) in the case of a Eurocurrency Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing, or (ii) in the case of an ABR Borrowing, not later than 1:00 p.m.,

New York City time, on the Business Day immediately preceding the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery, telecopy or electronic mail to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower.

(b)Content of Borrowing Requests. Each telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i)the aggregate amount of the requested Borrowing;

(ii)the date of such Borrowing, which shall be a Business Day;

(iii)whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;

    29

#4841-8625-7971v16

(iv)in the case of a Eurocurrency Borrowing, the Interest Period therefor, which shall be a period contemplated by the definition of the term “Interest Period” and permitted under Section 2.02(d); and

(v)the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05.

(c) Notice by the Administrative Agent to the Lenders. Promptly following

receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amounts of such Lender’s Loan to be made as part of the requested Borrowing.

(d) Failure to Elect. If no election as to the Type of a Borrowing is specified,

then the requested Borrowing shall be a Eurocurrency Borrowing having an Interest Period of one month. If a Eurocurrency Borrowing is requested but no Interest Period is specified, the requested Borrowing shall be a Eurocurrency Borrowing having an Interest Period of one month’s duration.

SECTION 2.04.[Reserved].

SECTION 2.05.Funding of Borrowings.

(a)Funding by Lenders. Each Lender shall make each Loan to be made by it

hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00

p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Borrower in the applicable Borrowing Request.

(b)Presumption by the Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative

Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative

Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. Nothing in this paragraph shall relieve any Lender of its obligation

    30

#4841-8625-7971v16

to fulfill its commitments hereunder, and shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

SECTION 2.06.Interest Elections.

(a)Elections by the Borrower for Borrowings. Subject to Section 2.03(d), the Loans constituting each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Borrowing, shall have the Interest Period specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a Borrowing of a different Type or to continue such Borrowing as a Borrowing of the same Type and, in the case of a Eurocurrency Borrowing, may elect the Interest Period therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans constituting such Borrowing, and the Loans constituting each such portion shall be considered a separate Borrowing.

(b)Notice of Elections. To make an election pursuant to this Section, the

Borrower shall notify the Administrative Agent of such election by telephone by the time that a

Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery, telecopy or electronic communication to the Administrative Agent of a written Interest Election Request signed by the Borrower.

(c)Content of Interest Election Requests. Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i)the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) of this paragraph shall be specified for each resulting Borrowing);

(ii)the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii)whether the relevant Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and

    31

#4841-8625-7971v16

(iv)if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period therefor after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period” and permitted under Section 2.02(d).

(d)Notice by the Administrative Agent to the Lenders. Promptly following

receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e)Failure to Elect; Events of Default. If the Borrower fails to deliver a

timely and complete Interest Election Request with respect to a Eurocurrency Borrowing prior to the end of the Interest Period therefor, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a Eurocurrency Borrowing having an Interest Period of one month. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing no outstanding Eurocurrency Borrowing may have an Interest Period of more than one month’s duration.

SECTION 2.07.Termination or Reduction of the Commitments.

(a)Scheduled Termination. Unless previously terminated, the Commitments

shall terminate on the Commitment Termination Date.

(b)Voluntary Termination or Reduction. The Borrower may at any time

terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is $10,000,000 (or, if less, the entire remaining amount of the Commitments) or a larger multiple of $1,000,000 in excess thereof and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.09, the total Revolving Credit Exposures would exceed the total Commitments.

(c)Notice of Voluntary Termination or Reduction. The Borrower shall notify

the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state

    32

#4841-8625-7971v16

that such notice is conditioned upon the effectiveness of other events, including credit facilities, in which case such notice may be revoked by the Borrower (by notice to the

Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(d)Effect of Termination or Reduction. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

SECTION 2.08.Repayment of Loans; Evidence of Debt.

(a)Repayment. The Borrower hereby unconditionally promises to pay to the Administrative Agent for account of the Lenders the outstanding principal amount of the Loans and all other amounts due and owing hereunder and under the other Loan Documents on the Maturity Date.

(b)Manner of Payment. Subject to Section 2.09(d), prior to any repayment or prepayment of any Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be paid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 11:00 a.m., New York City time, three Business Days before the scheduled date of such repayment; provided that, each repayment of Borrowings shall be applied to repay any outstanding ABR Borrowings before any other Borrowings. If the Borrower fails to make a timely selection of the Borrowing or Borrowings to be repaid or prepaid, such payment shall be applied, first, to pay any outstanding ABR Borrowings, and second, to any remaining Borrowings in the order of the remaining duration of their respective Interest Periods (the Borrowing with the shortest remaining Interest Period to be repaid first).

Each payment of a Borrowing shall be applied ratably to the Loans included in such Borrowing.

(c)Maintenance of Records by Lenders. Each Lender shall maintain in accordance with its usual practice records evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(d)Maintenance of Records by the Administrative Agent. The Administrative

Agent shall maintain records in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and each Interest Period therefor, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender of hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for account of the Lenders and each Lender’s share thereof.

(e)Effect of Entries. The entries made in the records maintained pursuant to

    33

#4841-8625-7971v16

paragraph (c) or (d) of this Section shall be primafacie evidence, absent obvious error, of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such records or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(f)Promissory Notes. Any Lender may request that Loans made by it be

evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent (and reasonably acceptable to the Borrower). Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.09.Prepayment of Loans.

(a) Optional Prepayments. The Borrower shall have the right at any time and

from time to time to prepay any Borrowing in whole or in part, without premium or penalty except for payments under Section 2.15, subject to the requirements of this Section.

(b) [Reserved].

(c) Mandatory Prepayments due to Borrowing Base Deficiency. In the event

that at any time any Borrowing Base Deficiency shall exist, the Borrower shall prepay the Loans in such amounts as shall be necessary so that such Borrowing Base Deficiency is immediately cured, provided that if, within five Business Days after delivery of a Borrowing Base Certificate demonstrating such Borrowing Base Deficiency (and/or at such other times as the Borrower has knowledge of such Borrowing Base Deficiency), the Borrower shall present the Administrative Agent with a reasonably feasible plan that is reasonably satisfactory to the Administrative Agent to enable such Borrowing Base Deficiency to be cured within 30 Business Days (which 30Business Day period shall include the five Business Days permitted for delivery of such plan), then such prepayment or reduction shall not be required to be effected immediately but may be effected in accordance with such plan (with such modifications as the Borrower may reasonably determine), so long as such Borrowing Base Deficiency is cured within such 30-Business Day period.

(d) Mandatory Prepayments due to Certain Events.

(i)Asset Sales. In the event that any Obligor shall receive any Net Asset Sale Proceeds at any time after the Restatement Effective Date, the Borrower shall, no later than the third Business Day following the receipt of such Net Asset Sale Proceeds, prepay the Loans in an amount equal to (A) if the Obligors have in aggregate less than 12

    34

#4841-8625-7971v16

Portfolio Investments, one hundred percent (100%) of such Net Asset Sale Proceeds, (B) if the Obligors have in aggregate 12 or more but less than 15 Portfolio Investments, fifty percent (50%) of such Net Asset Sale Proceeds, and (C) if the Obligors have in aggregate 15 or more Portfolio Investments, zero percent (0%) of such Net Asset Sale Proceeds. For the avoidance of doubt, the Net Asset Sale Proceeds from the sale of the Obligors’

15th Portfolio Investment shall be subject to a prepayment rate of 50% of such Net Asset

Sale Proceeds and the Net Asset Sale Proceeds from the sale of the Obligors’ 12th Portfolio Investment shall be subject to a prepayment rate of 100% of such Net Asset Sale Proceeds.

(ii)Extraordinary Receipts. In the event that any Obligor shall receive any Extraordinary Receipts at any time after the Restatement Effective Date, the Borrower shall, no later than the third Business Day following the receipt of such Extraordinary Receipts, prepay the Loans in an amount equal to (A) if the Obligors have in aggregate less than 12 Portfolio Investments, one hundred percent (100%) of such Extraordinary Receipts, (B) if the Obligors have in aggregate 12 or more but less than 15 Portfolio Investments, fifty percent (50%) of such Extraordinary Receipts, and (C) if the Obligors have in aggregate 15 or more Portfolio Investments, zero percent (0%) of such Extraordinary Receipts.

(iii)Returns of Capital. In the event that any Obligor shall receive any Return of Capital at any time after the Restatement Effective Date, the Borrower shall, no later than the third Business Day following the receipt of such Return of Capital, prepay the Loans in an amount equal to (A) if the Obligors have in aggregate less than 12 Portfolio Investments, one hundred percent (100%) of such Return of Capital, (B) if the Obligors have in aggregate 12 or more but less than 15 Portfolio Investments, fifty percent (50%) of such Return of Capital, and (C) if the Obligors have in aggregate 15 or more Portfolio Investments, zero percent (0%) of such Return of Capital.

(iv)Equity Issuances. In the event that the Borrower shall receive any Cash proceeds from the issuance of Equity Interests of the Borrower at any time after the Restatement Effective Date (excluding Cash proceeds received by the Borrower consisting of capital calls from its partners in respect of their existing partnership interests), the Borrower shall, no later than the third Business Day following the receipt of such Cash proceeds, prepay the Loans in an amount equal to one hundred percent (100%) of such Cash proceeds net of underwriting discounts and commissions or similar payments, taxes and other fees, commissions, premiums and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses.

(v)Indebtedness. In the event that any Obligor shall receive any Cash proceeds from the issuance of Indebtedness (other than Indebtedness permitted under Section 6.01(e), (f), (g) and (j)) at any time, such Obligor shall, no later than the third

    35

#4841-8625-7971v16

Business Day following the receipt of such Cash proceeds, prepay the Loans in an amount equal to one hundred percent (100%) of such Cash proceeds net of underwriting discounts and commissions or other similar payments, taxes and other fees, commissions, premiums and reasonable costs and expenses associated therewith, including reasonable legal fees and expenses.

(vi)Prepayment of Eurocurrency Loans. To the extent the Loans to be prepaid from proceeds from any of the events described in subsections (i) through (v) above are Eurocurrency Loans, the Borrower may defer such prepayment until the last day of the Interest Period applicable to such Loans, so long as the Borrower deposits an amount equal to the amount of such prepayment, no later than the third Business Day following the receipt of such proceeds, into a segregated collateral account in the name and under the dominion and control of the Administrative Agent pending application of such amount to the prepayment of the Loans on the last day of such Interest Period.

Notwithstanding the above, the Borrower shall only be required to apply Net Asset Sale Proceeds, Extraordinary Receipts and Return of Capital to prepay the Loans as described in subsections (i) through (iii) above if the cumulative aggregate amount of such Net Asset Sale Proceeds, Extraordinary Receipts and Return of Capital, from time to time, net of amounts of Loans theretofore prepaid therefrom exceeds $5,000,000.

(e) [Reserved].

(f) Notices, Etc. The Borrower shall notify the Administrative Agent by

telephone (confirmed by telecopy or electronic communication) of any prepayment hereunder

(i) in the case of prepayment of a Eurocurrency Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, a notice of optional prepayment may be conditioned upon the effectiveness of other events, in which case such notice of prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment or scheduled payment. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.11 and shall be made in the manner specified in Section 2.08(b). For the avoidance of doubt, prior to the Commitment Termination Date, any amounts prepaid pursuant to this Section may be reborrowed pursuant to this Agreement.

    36

#4841-8625-7971v16

SECTION 2.10.Fees

(a)Commitment Fee. The Borrower agrees to pay to the Administrative Agent for account of each Lender a commitment fee, which shall accrue for the period beginning on the Restatement Effective Date to but excluding the earlier of the date such Commitment terminates and the Commitment Termination Date, at a rate equal to (x) 1.00% per annum on the daily unused amount of the Commitment of such Lender if the Revolving Credit Exposure for such Lender for such day is less than or equal to sixty percent (60%) of such Lender’s

Commitment and (y) 0.375% per annum on the daily unused amount of the Commitment of such Lender if the Revolving Credit Exposure for such Lender for such day is greater than sixty percent (60%) of such Lender’s Commitment. Accrued commitment fees shall be payable within one Business Day after each Quarterly Date and on the Commitment Termination Date. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b)Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(c)Payment of Fees. All fees payable hereunder shall be paid on the dates

due, in Dollars and immediately available funds, to the Administrative Agent for distribution, in the case of facility fees and participation fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances absent manifest error. Any fees representing the Borrower’s reimbursement obligations of expenses, to the extent the requirements of an invoice are not otherwise specified in this Agreement, shall be due (subject to the other terms and conditions contained herein) within ten Business Days of the date that the Borrower receives from the Administrative Agent a reasonably detailed invoice for such reimbursement obligations.

SECTION 2.11.Interest.

(a) ABR Loans. The Loans constituting each ABR Borrowing shall bear

interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.

(b) Eurocurrency Loans. The Loans constituting each Eurocurrency

Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the related Interest Period for such Borrowing plus the Applicable Margin.

(c) Default Interest. Notwithstanding the foregoing clauses (a) and (b), if any

principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration, by mandatory prepayment or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided above or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

    37

#4841-8625-7971v16

(d) Payment of Interest. Accrued interest on each Loan shall be payable in

arrears on each Interest Payment Date for such Loan and upon the Maturity Date; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the Maturity Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Borrowing prior to the end of the Interest Period therefor, accrued interest on such Borrowing shall be payable on the effective date of such conversion.

SECTION 2.12.Market Disruption, Alternate Rate of Interest and Illegality.

(a)If at the time that the Administrative Agent shall seek to determine the

Reference Bank Rate less than two Reference Banks shall supply a rate to the Administrative Agent for purposes of determining the Eurocurrency Rate for such Eurocurrency Borrowing, then such Borrowing shall be made as an ABR Borrowing at the Alternate Base Rate (such rate, the “COF Rate”).

(b)If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:

(i)the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the Eurocurrency Rate, as applicable, for a Loan for the applicable Interest Period; or

(ii)the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the Eurocurrency Rate, as applicable, for a Loan for the applicable Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period,

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (A) any Interest Election Request that requests the conversion of any Eurocurrency Borrowing to, or continuation of any Eurocurrency Borrowing for the applicable Interest Period, shall be ineffective, and (B) such Borrowing shall be made as an ABR Borrowing; provided, further that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.

(c)Notwithstanding any other provision of this Agreement, in the event that it

becomes unlawful for any Lender or its Applicable Lending Office to honor its obligation to make or maintain Eurocurrency Borrowings hereunder, then such Lender shall promptly notify the Borrower thereof (with a copy to the Administrative Agent), such Lender’s obligation to

    38

#4841-8625-7971v16

make, convert or continue Eurocurrency Borrowings shall be suspended until such time as such Lender may again make or maintain Eurocurrency Borrowings, and if applicable law shall so mandate, such Lender’s Eurocurrency Borrowings shall be prepaid by the Borrower, together with accrued and unpaid interest thereon and all other amounts payable by the Borrower under this Agreement, on or before such date as shall be mandated by such applicable law.

SECTION 2.13.Computation of Interest. All interest hereunder shall be

computed on the basis of a year of 360 days, except that ABR Borrowings, at times when the Alternate Base Rate is based on the Prime Rate, shall be computed on the basis of a year of 365 days or 366 days, as the case may be, and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or Eurocurrency Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.14.Increased Costs.

(a)If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, compulsory loan, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or

(ii)impose on any Lender or the London interbank market any other condition, cost or expense, affecting this Agreement or Eurocurrency Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost (other than costs which are (A) Indemnified Taxes, or (B) Taxes described in clauses (b) through (e) of the definition of

Excluded Taxes) to such Lenders of making, continuing, converting into or maintaining any Eurocurrency Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender, in Dollars, such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender determines that any Change in Law

regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), by an amount deemed to be material by such Lender, then from time to time the Borrower will pay to such Lender, in Dollars, such additional amount

    39

#4841-8625-7971v16

or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c) Certificates from Lenders. A certificate of a Lender setting forth in

reasonable detail the basis for and the calculation of the amount or amounts, in Dollars, necessary to compensate such Lender or its holding company as specified in paragraph (a) or (b) of this Section shall be promptly delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender to demand

compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than six months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; providedfurther that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.15.Break Funding Payments. In the event of (a) the payment

of any principal of any Eurocurrency Loan other than on the last day of an Interest Period therefor (including as a result of the occurrence of an Event of Default), (b) the conversion of any Eurocurrency Loan other than on the last day of an Interest Period therefor, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is permitted to be revocable under Section 2.09(f) and is revoked in accordance herewith), or (d) the assignment as a result of a request by the Borrower pursuant to Section 2.19(b) of any Eurocurrency Loan other than on the last day of an Interest Period therefor, then, in any such event, the Borrower shall compensate each affected Lender for the loss, cost and expense attributable to such event (excluding loss of anticipated profits). In the case of a Eurocurrency Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount determined by such Lender to be equal to the excess, if any, of

(i)the amount of interest that such Lender would pay for a deposit equal to the principal amount of such Loan for the period from the date of such payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue, the duration of the

Interest Period that would have resulted from such borrowing, conversion or

continuation) if the interest rate payable on such deposit were equal to the Adjusted LIBO

Rate for such Interest Period, over

    40

#4841-8625-7971v16

(ii)the amount of interest that such Lender would earn on such principal amount for such period if such Lender were to invest such principal amount for such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for deposits denominated in Dollars from other banks in the eurocurrency market at the commencement of such period.

Payment under this Section shall be made upon request of a Lender delivered not later than ten Business Days following the payment, conversion, or failure to borrow, convert, continue or prepay that gives rise to a claim under this Section accompanied by a certificate of such Lender setting forth in reasonable detail the amount or amounts that such Lender is entitled to receive pursuant to this Section (provided that such Lender shall not be required to disclose any confidential or pricing information or any other information prohibited to be disclosed by applicable law), which certificate shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

SECTION 2.16.Taxes.

(a)Payments Free of Taxes. Any and all payments by or on account of any

obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable law. If any applicable law requires the deduction or withholding of any Tax from any such payment, then (i) the Borrower shall make such deductions or withholding, (ii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law and (iii) if such Tax is an Indemnified Tax or Other Tax, the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made.

(b)Payment of Other Taxes by the Borrower. In addition, the Borrower shall

pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent and each Lender for, and within 30 Business Days after written demand therefor, pay the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority, except for any Indemnified Taxes or Other Taxes imposed as a result of the gross negligence or willful misconduct of the Administrative Agent or such Lender. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender,

    41

#4841-8625-7971v16

or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d)Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)Foreign Lenders. Any Foreign Lender that is entitled to an exemption

from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

In addition, any Foreign Lender, if requested by the Borrower or the

Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Foreign Lender is subject to backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, if the Borrower is resident for tax

purposes in the United States, any Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent) whichever of the following is applicable:

(i)duly completed copies of Internal Revenue Service Form W-8BEN or any successor form claiming eligibility for benefits of an income tax treaty to which the

United States is a party,

(ii)duly completed copies of Internal Revenue Service Form W-8ECI or any successor form certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States,

(iii)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (A) a certificate to the effect that such

Foreign Lender is not (1) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (B) duly completed copies of Internal Revenue

    42

#4841-8625-7971v16

Service Form W-8BEN-E (or any successor form) certifying that the Foreign Lender is not a United States Person, or

(iv)any other form including Internal Revenue Service Form W-8IMY as applicable prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

In addition, upon reasonable request of the Borrower or the Administrative Agent,

each Foreign Lender shall deliver such forms promptly upon the expiration or invalidity of any form previously delivered by such Foreign Lender, provided it is legally able to do so at the time. Each Foreign Lender shall promptly notify the Borrower and the Administrative Agent at any time the chief tax officer of such Foreign Lender becomes aware that it no longer satisfies the legal requirements to provide any previously delivered form or certificate to the Borrower (or any other form of certification adopted by the U.S. or other taxing authorities for such purpose).

(f) United States Lenders. Each Lender that is not a Foreign Lender shall

deliver to the Borrower (with a copy to the Administrative Agent), prior to the date on which such Lender becomes a party to this Agreement, upon the expiration or invalidity of any forms previously delivered and at times reasonably requested by the Borrower, duly completed copies of Internal Revenue Service Form W-9 or any successor form.

(g) FATCA. If a payment made to a Lender under any Loan Document would

be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by Law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (g), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(h) Treatment of Certain Refunds. If the Administrative Agent or any Lender

determines, in its sole discretion exercised in good faith, that it has received a refund or credit (in lieu of such refund) of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all reasonable out-ofpocket

    43

#4841-8625-7971v16

expenses of the Administrative Agent or any Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent or any Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, or any Lender in the event the Administrative Agent or any Lender is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the Administrative Agent or any Lender be required to pay any amount to the Borrower pursuant to this paragraph (h) the payment of which would place the Administrative Agent or such Lender in a less favorable net after-Tax position than the Administrative Agent, or such Lender would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This subsection shall not be construed to require the Administrative Agent or any Lender to make available its tax returns or its books or records (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

(i) Survival. Each party’s obligations under this Section 2.16 shall survive the

resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

SECTION 2.17.Payments Generally; Pro Rata Treatment; Sharing of Set-

offs.

(a) Payments by the Borrower. The Borrower shall make each payment

required to be made by it hereunder (whether of principal, interest or fees, or under Section 2.14, 2.15 or 2.16, or otherwise) or under any other Loan Document (except to the extent otherwise provided therein) prior to 2:00 p.m., New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at the Administrative Agent’s Account, except as otherwise expressly provided in the relevant Loan Document and payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03, which shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All amounts owing under this Agreement (including commitment fees, payments required under Section 2.14, and payments required under Section 2.15 relating to any Loan) or under any other Loan Document (except to the extent otherwise provided therein) are payable in Dollars.

    44

#4841-8625-7971v16

(b) Application of Insufficient Payments. If at any time insufficient funds are

received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, to pay principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

(c) Pro Rata Treatment. Except to the extent otherwise provided herein:

(i) each Borrowing shall be made from the Lenders, and each termination or reduction of the amount of the Commitments under Section 2.07 shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (ii) each Borrowing shall be allocated pro rata among the Lenders according to the amounts of their respective Commitments (in the case of the making of Loans) or their respective Loans that are to be included in such Borrowing (in the case of conversions and continuations of Loans); (iii) each payment of commitment fees under Section 2.10 shall be made for account of the

Lenders pro rata according to the average daily unused amounts of their respective

Commitments; (iv) each payment or prepayment of principal of Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; and (v) each payment of interest on Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to such Lenders.

(d) Sharing of Payments by Lenders. If any Lender shall, by exercising any

right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon then due than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

    45

#4841-8625-7971v16

(e) Presumptions of Payment. Unless the Administrative Agent shall have

received notice from the Borrower prior to the date on which any payment is due to the

Administrative Agent for account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including

the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Effective Rate.

(f) Certain Deductions by the Administrative Agent. If any Lender shall fail

to make any payment required to be made by it pursuant to Section 2.05(b) or 2.17(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.18.Defaulting Lenders.

Notwithstanding any provision of this Agreement to the contrary, if any Lender

becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)commitment fees pursuant to Section 2.10(a) shall cease to accrue on the

unfunded portion of the Commitment of such Defaulting Lender; and

(b)the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender, including as set forth in Section 9.02(b)(i), (ii), (iii), (iv) or (v) (but not, for the avoidance of doubt, pursuant to the proviso following Section 9.02(b)(v)), shall require the consent of such Defaulting Lender.

In the event that the Administrative Agent and the Borrower each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a

Defaulting Lender, then such Lender shall no longer be deemed a Defaulting Lender and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the

Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

    46

#4841-8625-7971v16

SECTION 2.19.Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests

compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.16, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any cost or expense not required to be reimbursed by the Borrower and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under

Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.16, and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with clause (a) above, or if any Lender becomes a Defaulting Lender or is a non-consenting Lender (that the Borrower is permitted to replace as provided in Section 9.02(d)), then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Section 2.14 and Section 2.16) and obligations under this Agreement and the other Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts, including, without limitation, any amounts under Section 2.15), (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments and (iv) in the case of any assignment as a result of a non-consenting Lender (that the Borrower is permitted to replace as provided in Section 9.02(d)), the applicable assignee shall have consented to the applicable amendment, waiver or consent. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

(c) Defaulting Lender. If any Lender shall fail to make any payment required

    47

#4841-8625-7971v16

to be made by it pursuant to Section 2.05 or 9.03(c), then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the

Administrative Agent to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under such Sections; in the case of each of (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

SECTION 2.20.Extension of Maturity Date.

(a)Extension. The Borrower, upon providing written notice to the Administrative Agent no earlier than 90 days and no later than 30 days prior to July 31, 2020, shall have the right to extend the Maturity Date to July 31, 2021.

(b)Conditions to Effectiveness of Extension. Notwithstanding the foregoing,

the extension of the Maturity Date pursuant to this Section 2.20 shall not be effective unless:

(i)no Default or Event of Default shall have occurred and be continuing on the date of such extension and immediately after giving effect thereto;

(ii)each of the representations and warranties contained in this Agreement and in each of the other Loan Documents shall be true and correct in all material respects (unless the relevant representation and warranty already contains a materiality qualifier, in which case such representation and warranty shall be true and correct in all respects) on and as of the date of such extension after giving effect thereto, as though made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and

(iii)the Borrower shall have paid to the Administrative Agent for the benefit of the Lenders a non-refundable extension fee equal to 0.25% of the principal amount of the Loans outstanding on such date.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Obligor represents and warrants to the Lenders that:

SECTION 3.01.Organization; Powers. Each Obligor is duly organized or

incorporated, as applicable, validly existing and in good standing under the laws of the jurisdiction of its organization or incorporation, as applicable, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse

    48

#4841-8625-7971v16

Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required of each Obligor.

SECTION 3.02.Authorization; Enforceability. The Transactions are within

each Obligor’s corporate powers and have been duly authorized by all necessary corporate and, if required, by all necessary stockholder action. This Agreement has been duly executed and delivered by the Borrower and constitutes, and each of the other Loan Documents to which it, or any other Obligor, is a party when executed and delivered will constitute, a legal, valid and binding obligation of the Borrower or such Obligor, enforceable in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

SECTION 3.03.Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except for (i) such as have been or will be obtained or made and are in full force and effect and (ii) filings and recordings in respect of the Liens created pursuant to the Security Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of any Obligor or any order of any Governmental Authority, (c) will not violate or result in a default in any material respect under any indenture, agreement or other instrument binding upon any Obligor or any of its assets, or give rise to a right thereunder to require any payment to be made by any such Person, and (d) except for the Liens created pursuant to the Security Documents, will not result in the creation or imposition of any Lien on any asset of any Obligor.

SECTION 3.04.Financial Condition; No Material Adverse Change.

(a) Financial Statements. The Borrower has heretofore delivered (i) the

audited consolidated balance sheet and statements of its operations, assets and liabilities, changes in net assets and cash flows as of and for the year ended December 31, 2015, reported on by Grant Thornton LLP, independent public accountants, and (ii) unaudited consolidated balance sheet and statements of its operations, assets and liabilities, changes in net assets and cash flows for the financial quarter ending March 31, 2016. Such financial statements present fairly, in all material respects, the consolidated financial position and results of operations and cash flows of the Borrower as of such dates and for such periods in accordance with GAAP applied on a consistent basis, subject to, in the case of such interim statements, year-end audit adjustments and the absence of footnotes. None of the Borrower or any of its Subsidiaries has on the Restatement Effective Date any material contingent liabilities, material liabilities for taxes, material unusual forward or material long-term commitments or material unrealized or material anticipated losses from any unfavorable commitments not reflected in the financial statements referred to above.

(b) No Material Adverse Change. Since December 31, 2015, there has not

    49

#4841-8625-7971v16

been any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (i) the business, Portfolio Investments and other assets, liabilities and financial condition of the Borrower and its Subsidiaries taken as a whole (excluding in any case a decline in the net asset value of the Borrower or a change in general market conditions or values of the Portfolio Investments of the Borrower or any of its Subsidiaries) or (ii) the validity or enforceability of the Loan Documents or the rights or remedies of the Administrative Agent and the Lenders thereunder.

(c) Solvency. The Obligors on a consolidated basis are solvent.

SECTION 3.05.Litigation; Actions, Suits and Proceedings. There are no

actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority now pending against or, to the knowledge of any Obligor, threatened against or directly affecting any Obligor (i) that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve this Agreement or the Transactions.

SECTION 3.06.Compliance with Laws and Agreements. Each Obligor is

in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.07.Anti-Corruption Laws and Sanctions; Anti-MoneyLaundering Laws.

(a) Anti-Corruption Laws and Sanctions. Each Obligor has implemented and

maintains in effect policies and procedures designed to ensure compliance by such Obligor, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and each Obligor, its Subsidiaries and their respective officers and employees and to the knowledge of such Obligor its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) any Obligor, any Subsidiary or to the knowledge of such Obligor or such Subsidiary any of their respective directors, officers or employees, or (b) to the knowledge of any Obligor, any agent of any Obligor or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing, use of proceeds or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.

(b) No Conflict with Anti-Money Laundering Laws. To the knowledge of

each Obligor, the operations of the Obligors are and have been conducted at all times in material compliance with (i) applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and the rules and regulations promulgated thereunder, (ii) the money laundering statutes of all jurisdictions where

    50

#4841-8625-7971v16

the Obligors conduct business, and the rules and regulations thereunder and (iii) any applicable related or similar rules, regulations or guidelines issued, administered or enforced by any court, arbitrator, regulatory body, administrative agency, governmental body or other authority or agency (collectively, the “Anti-Money Laundering Laws”). No action, suit or proceeding by or before any court, arbitrator, regulatory body, administrative agency, governmental body or other authority or agency involving the Obligors with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of any Obligor, threatened.

SECTION 3.08.Taxes. Each Obligor has timely filed or caused to be filed

all material Tax returns and reports required to have been filed and has paid or caused to be paid all material Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.09.ERISA. No ERISA Event has occurred or is reasonably

expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10.Disclosure. Each Obligor has disclosed to the Administrative Agent all agreements and instruments to which it or any of its Subsidiaries is subject, that if terminated prior to its term, and all other matters known to it that have occurred, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the written reports, financial statements, certificates or other written information (other than projections, other forward looking information, information of a general economic or industry specific nature or information relating to third parties) furnished by or on behalf of any Obligor to the Lenders in connection with the negotiation of this Agreement and the other Loan Documents or delivered hereunder or thereunder (as modified or supplemented by other information so furnished), when taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed in good faith to be reasonable at the time of the preparation thereof (it being understood that projections are subject to inherent uncertainties and contingencies which may be outside of the Borrower’s control and that no assurance can be given that projections will be realized, and that actual results for the periods covered by projections may differ from the projected results set forth in such projections and that such differences may be material).

SECTION 3.11.Investment Company Act; Investment Policies; MarginRegulations.

(a) Compliance with Investment Company Act. The business and other

    51

#4841-8625-7971v16

activities of the Borrower and its Subsidiaries, including the making of the Loans hereunder, the application of the proceeds and repayment thereof by the Borrower and the consummation of the Transactions contemplated by the Loan Documents do not result in a material violation or breach of the provisions of the Investment Company Act or any rules, regulations or orders issued by the Securities and Exchange Commission thereunder, in each case, that are applicable to the Borrower and its Subsidiaries.

(b) Investment Policies. The Borrower is in compliance with the investment

policies, restrictions and limitations for the Borrower delivered to the Administrative Agent on July 29, 2016 (and posted for the benefit of the Lenders in connection with the Restatement Effective Date) (as such investment policies have been amended, modified or supplemented in a manner not prohibited by clause (r) of Article VII, the “Investment Policies”), except to the extent that the failure to so comply could not reasonably be expected to result in a Material Adverse Effect.

(c) Use of Credit. Neither the Borrower nor any of its Subsidiaries is engaged

principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any Margin Stock.

SECTION 3.12.Material Agreements and Liens.

(a) Material Agreements. Part A of Schedule II is a complete and correct list

of each credit agreement, loan agreement, indenture, note purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness for borrowed money or any extension of credit (or commitment for any extension of credit) to, or guarantee for borrowed money, by the Borrower or any of its Subsidiaries outstanding on the Restatement Effective Date, other than the Debt Documents, and the aggregate principal or face amount outstanding or that may become outstanding under each such arrangement in each case as of the Restatement Effective Date is correctly described in Part A of Schedule II.

(b) Liens. Part B of Schedule II is a complete and correct list of each Lien

securing Indebtedness of any Person outstanding on the Restatement Effective Date covering any property of the Borrower or any Obligors, other than Liens under the Debt Documents, and the aggregate amount of such Indebtedness secured (or that may be secured) by each such Lien and the property covered by each such Lien is correctly described in Part B of Schedule II.

SECTION 3.13.Subsidiaries and Investments.

(a) Subsidiaries. Set forth in Part A of Schedule IV is a complete and correct

list of all of the Subsidiaries of the Borrower on the Restatement Effective Date together with, for each such Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each Person holding ownership interests in such Subsidiary and (iii) the nature of the ownership interests held

    52

#4841-8625-7971v16

by each such Person and the percentage of ownership of such Subsidiary represented by such ownership interests. Except as disclosed in Part A of Schedule IV, (x) the Borrower owns, free and clear of Liens (other than any lien permitted by Section 6.02 hereof), and has (and will have) the unencumbered right to vote, all outstanding ownership interests in each Person shown to be held by it in Part A of Schedule IV, (y) all of the issued and outstanding capital stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (z) there are no outstanding Equity Interests with respect to such Person.

(b) Investments. Set forth in Part B of Schedule IV is a complete and correct

list of all Investments (other than Investments of the types referred to in clauses (b) and (c) of Section 6.04) held by any of the Obligors in any Person on the Restatement Effective Date and, for each such Investment, (x) the identity of the Person or Persons holding such Investment and (y) the nature of such Investment. Except as disclosed in Part B of Schedule IV, each of the Borrower and its Subsidiaries owns, free and clear of all Liens (other than Liens created pursuant to the Security Documents and other Liens permitted hereunder), all such Investments.

SECTION 3.14.Properties

(a) Title Generally. Each of the Borrower and its Subsidiaries has good title

to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b) Intellectual Property. Each of the Borrower and its Subsidiaries owns, or

is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.15.Affiliate Agreements. As of the Restatement Effective

Date, the Borrower has heretofore delivered (to the extent not otherwise publicly filed with the Securities and Exchange Commission) to each of the Lenders true and complete copies of each of the Affiliate Agreements as in effect as of the Restatement Effective Date (including any amendments, supplements or waivers executed and delivered thereunder and any schedules and exhibits thereto). As of the date of hereof, each of the Affiliate Agreements is in full force and effect.

SECTION 3.16.Security Documents

The provisions of the Security Documents are effective to create in favor of the

Collateral Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority

Lien (subject to Liens permitted by Section 6.02) on all right, title and interest of the respective Obligors in the Collateral described therein to secure the Secured Obligations (as defined in the

    53

#4841-8625-7971v16

Guarantee and Security Agreement), except for any failure that would not constitute an Event of Default under Section 7.01(p). Except for filing of UCC financing statements and filings contemplated hereby and by the Security Documents, no filing or other action will be necessary to perfect such Liens to the extent required thereunder, except for the failure to make any filing that would not constitute an Event of Default under Section 7.01(p).

SECTION 3.17.EEA Financial Institutions. No Obligor is an EEA Financial Institution.

ARTICLE IV

CONDITIONS

SECTION 4.01.Restatement Effective Date. This Agreement shall become

effective on the date on which the Administrative Agent shall have received each of the following documents, fees and other items each of which shall be satisfactory to the

Administrative Agent (and to the extent specified below, to each Lender) in form and substance (or such condition shall have been waived in accordance with Section 9.02):

(a)Executed Counterparts. From each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy or electronic transmission of a signed signature page to this Agreement) that such party has signed a counterpart of this Agreement.

(b)Fees and Expenses. The Administrative Agent shall have received evidence of the payment by the Borrower of all fees and expenses payable to the Lenders on the Restatement Effective Date that the Borrower has agreed to pay in connection with this Agreement (including any fee letter or commitment letter entered into between the Borrower and the Administrative Agent and the Syndication Agent). The Borrower shall have paid all reasonable expenses (including the legal fees of Milbank, Tweed, Hadley & McCloy LLP) for which invoices have been presented prior to the Restatement Effective Date that the Borrower has agreed to pay in connection with this Agreement.

(c)Opinion of Counsel to the Obligors. A favorable written opinion

(addressed to the Administrative Agent and the Lenders and dated the Restatement Effective Date) of Covington & Burling LLP, special counsel for the Obligors, in form and substance reasonably satisfactory to the Administrative Agent, covering such other matters relating to the Obligors, this Agreement or the Transactions as the Required Lenders shall reasonably request (and the Borrower hereby instructs such counsel to deliver such opinion to the Lenders and the Administrative Agent).

(d)Opinion of Special New York Counsel to JPMCB. An opinion, dated the

    54

#4841-8625-7971v16

Restatement Effective Date, of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to JPMCB (and JPMCB hereby instructs such counsel to deliver such opinion to the Lenders).

(e)Corporate Documents. Such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Obligors, the authorization of the Transactions and any other legal matters relating to the Obligors, this Agreement or the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

(f)Officer’s Certificate. A certificate, dated the Restatement Effective Date and signed by the President, a Vice President, Financial Officer or an authorized signatory of the Borrower, confirming compliance with the conditions set forth in the lettered clauses of the first sentence of Section 4.02.

(g)Liens. Results of a recent lien search in each relevant jurisdiction with respect to the Borrower and such search shall reveal no liens on any of the assets of the Obligors except for liens permitted under Section 6.02 or liens to be discharged on or prior to the Restatement Effective Date pursuant to documentation reasonably satisfactory to the Administrative Agent.

(h)Guarantee and Security Agreement. The duly executed Guarantee and Security Agreement.

(i)Borrowing Base Certificate. A pro-forma Borrowing Base Certificate as of a date not more than five days prior to the Restatement Effective Date.

(j)Valuation Policy. A copy of the Valuation Policy.

(k)Know Your Customer Documentation. All documentation and other information required by applicable “know your customer” and anti-money laundering rules and regulations.

(l)Acquisition Documentation. All material documentation relating to the Acquisition, including the investment management agreement and the membership interest purchase agreement between the Buyer and Resource Capital Corp. (the “Acquisition Agreement”).

(m)Acquisition. Evidence that the Acquisition has been consummated in accordance in all material respects with the terms of the Acquisition Agreement (without any amendment, modification or waiver of any of the provisions thereof that would be materially adverse to the Lenders).

    55

#4841-8625-7971v16

(n)Capital Contribution. Evidence that the Borrower has received the proceeds of the capital contribution, the terms of which (as well as the agreements relating thereto) shall be reasonably satisfactory to the Lenders.

(o)Other Documents. Such other documents as the Administrative Agent or any Lender or special New York counsel to JPMCB may reasonably request.

(p)Borrower’s Net Worth. The Borrower’s consolidated net worth shall not be less than $135,000,000 (determined immediately after giving effect to the transfer of those portfolio investments being transferred to New NP, LLC in connection with the Acquisition).

(q)Restatement Effective Date Adjustments. Evidence that each Continuing Lender shall have, as of the Restatement Effective Date, received payment in full of all accrued and unpaid interest and facility fees owing to such Lender under the Existing Credit Facility and the Borrowings and other adjustments to the Loans described in Section 2.02(e) shall have occurred.

(r)Retiring Lender. Evidence that the Retiring Lender shall have, as of the Restatement Effective Date, received repayment in full of its outstanding loans and all accrued and unpaid interest, facility fees, and any other amounts owing to the Retiring Lender under the Existing Credit Facility.

The Administrative Agent shall notify the Borrower and the Lenders of the Restatement Effective Date, and such notice shall be conclusive and binding.

SECTION 4.02.Each Credit Event. The obligation of each Lender to make

any Loan is additionally subject to the satisfaction of the following conditions:

(a)the representations and warranties of each Obligor set forth in this Agreement and in the other Loan Documents shall be true and correct in all material respects (unless the relevant representation and warranty already contains a materiality qualifier or, in the case of the representations and warranties in Sections 3.01 (first sentence with respect to the Obligors), 3.02, 3.04, 3.11 and 3.15 of this Agreement, and in Sections 2.01, 2.02 and 2.05 through 2.08 of the Guarantee and Security Agreement, in each such case, such representation and warranty shall be true and correct in all respects) on and as of the date of such Loan or, as to any such representation or warranty that refers to a specific date, as of such specific date;

(b)at the time of and immediately after giving effect to such Loan, no Default or Event of Default shall have occurred and be continuing; and

(c)either (i) the aggregate Covered Debt Amount (after giving effect to such extension of credit) shall not exceed either the Borrowing Base or the Adjusted Portfolio Investments Amount reflected on the Borrowing Base Certificate most recently delivered to the Administrative Agent and, to the Borrower’s knowledge at such time, no Borrowing Base

    56

#4841-8625-7971v16

Deficiency exists or would exist after giving effect to such extension of credit as well as any concurrent acquisitions of Portfolio Investments, distributions or payment of outstanding Loans or Indebtedness incurred pursuant to Section 6.01(g), or (ii) the Borrower shall have delivered an updated Borrowing Base Certificate demonstrating that no Borrowing Base Deficiency exists after giving effect to such extension of credit as well as any concurrent acquisitions or Portfolio Investments or payment of outstanding Loans or Indebtedness incurred pursuant to Section 6.01(g).

Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in the preceding sentence. For the avoidance of doubt, the conversion or continuation of a Borrowing as the same or a different Type (without increase in the principal amount thereof) shall not be considered to be the making of a Loan.

ARTICLE V

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and

interest on each Loan and all fees due and payable hereunder (other than Unasserted Contingent Obligations) shall have been paid in full, each Obligor, as applicable, covenants and agrees with the Lenders that:

SECTION 5.01.Financial Statements and Other Information. The Borrower

will furnish to the Administrative Agent for distribution to each Lender:

(a)within 120 days after the end of each fiscal year of the Borrower, the audited consolidated balance sheet and related statements of income or operations, assets and liabilities, as applicable, changes in Shareholders’ Equity and cash flows of the Borrower and its consolidated Subsidiaries as of the end of and for such year, setting forth in comparative form the figures for the previous fiscal year, all reported on by Grant Thornton LLP or other independent public accountants of recognized national standing to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b)within 45 days after the end of each fiscal quarter of each fiscal year of the Borrower, the consolidated balance sheet and related statements of income or operations, assets and liabilities, as applicable, changes in Shareholders’ Equity and cash flows of the Borrower and its consolidated Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for (or, in the case of the balance sheet, as of the end of) the corresponding period or periods of the previous fiscal year, all certified by a Financial Officer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated

    57

#4841-8625-7971v16

Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c)concurrently with any delivery of financial statements under clause (a) or (b) of this Section, a certificate of a Financial Officer of the Borrower (i) certifying as to whether the Borrower has knowledge that a Default has occurred or is occurring during the applicable period and, if a Default has occurred or is occurring, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.01(g), 6.02(d), 6.04(d), 6.05 and 6.07 and (iii) stating whether any change in GAAP as applied by (or in the application of GAAP by) the Borrower has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect as determined by the Borrower of such change on the financial statements accompanying such certificate;

(d)as soon as available and in any event not later than the last Business Day of the calendar month following each monthly accounting period (ending on the last day of each calendar month) of the Borrower, a Borrowing Base Certificate as at the last day of such accounting period presenting the Borrower’s computation (and including the rationale for any industry reclassification and a comparison to show changes from the Borrowing Base Certificate from the immediately prior period) and including a certification of a Financial Officer as to compliance with Section 6.04(d) during the period covered by such Borrowing Base Certificate;

(e)promptly but no later than five Business Days after the Borrower shall at any time have knowledge that there is a Borrowing Base Deficiency, a Borrowing Base Certificate as at the date the Borrower has knowledge of such Borrowing Base Deficiency indicating the amount of the Borrowing Base Deficiency as at the date the Borrower obtained knowledge of such deficiency and the amount of the Borrowing Base Deficiency as of the date not earlier than one Business Day prior to the date the Borrowing Base Certificate is delivered pursuant to this paragraph;

(f)promptly upon receipt thereof, copies of (x) all significant and non-routine reports and (y) reports stating that material weaknesses exist in the Borrower’s internal controls or procedures or any other matter that could reasonably be expected to result in a Material Adverse Effect submitted to management or the board of directors (or similar governing body) of the Borrower by the Borrower’s independent public accountants in connection with each annual, interim or special audit or review of any type of the financial statements or related internal control systems of the Borrower or any of its Subsidiaries delivered by such accountants to the management or board of directors of the Borrower;

(g)[Reserved];

(h)promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any of its Subsidiaries, or compliance with the terms of this Agreement and the other Loan Documents, as the Administrative Agent or any Lender may reasonably request;

    58

#4841-8625-7971v16

(i)within 45 days after the end of each fiscal quarter of the Borrower and upon the request of any Lender, all external valuation reports relating to the Portfolio Investments delivered by the Approved Third-Party Appraiser in connection with the quarterly appraisals of Unquoted Investments (provided that any recipient of such reports executes and delivers any non-reliance letter, release, confidentiality agreement or similar agreements required by such Approved Third-Party Appraiser);

(j)within 45 days after the end of each fiscal quarter of the Borrower and upon the request of any Lender, any report that the Borrower receives from the Custodian listing the Portfolio Investments, as of the end of such fiscal quarter, held in the

Collateral Account; provided that the Borrower shall use its commercially reasonable efforts to cause the Custodian to provide such report;

(k)within forty-five (45) days after the end of the first three (3) fiscal quarters of each fiscal year of the Borrower and ninety (90) days after the end of each fiscal year of the Borrower, a schedule setting forth in reasonable detail with respect to each Portfolio Investment where there has been a realized gain or loss in the most recently completed fiscal quarter, (i) the cost basis of such Portfolio Investment, (ii) the proceeds received with respect to such Portfolio Investment representing repayments of principal during the most recently ended fiscal quarter, and (iii) any other amounts received with respect to such Portfolio Investment representing exit fees or prepayment penalties during the most recently ended fiscal quarter;

(l)within forty-five (45) days after the end of the first three (3) fiscal quarters of each fiscal year of the Borrower and ninety (90) days after the end of each fiscal year of the Borrower, a schedule setting forth in reasonable detail with respect to each Portfolio Investment, (i) the aggregate amount of all capitalized paid-in-kind interest for such Portfolio Investment during the most recently ended fiscal quarter and (ii) the aggregate amount of all paid-in-kind interest collected during the most recently ended fiscal quarter;

(m)within forty-five (45) days after the end of the first three (3) fiscal quarters of each fiscal year of the Borrower and ninety (90) days after the end of each fiscal year of the Borrower, a schedule setting forth in reasonable detail with respect to each Portfolio Investment, (i) the amortized cost of each Portfolio Investment as of the end of such fiscal quarter, (ii) the fair market value of each Portfolio Investment as of the end of such fiscal quarter, and (iii) the unrealized gains or losses as of the end of such fiscal quarter;

(n)within forty-five (45) days after the end of the first three (3) fiscal quarters of each fiscal year of the Borrower and ninety (90) days after the end of each fiscal year of the Borrower, a schedule setting forth in reasonable detail with respect to each Portfolio Investment the change in unrealized gains and losses for such quarter. Such schedule will report the change in unrealized gains and losses by Portfolio Investment by showing the unrealized gain or loss for each Portfolio Investment as of the last day of the preceding fiscal quarter compared to the unrealized gain or loss for such Portfolio

    59

#4841-8625-7971v16

Investment as of the last day of the most recently ended fiscal quarter;

(o)promptly but no later than five Business Days upon any transfer via a participation interest of the economic interest of any Portfolio Investment to any non-

Obligor, all material information relating to such transfer; and

(p)promptly but no later than five Business Days after any amendment, supplement or modification to the Limited Partnership Agreement, notice of such amendment, supplement or modification together with a copy of such amendment, supplement or modification.

SECTION 5.02.Notices of Material Events. Each Obligor will furnish to

the Administrative Agent for distribution to each Lender prompt (and in any event within five Business Days) written notice of the occurrence of any Default or Event of Default of which it is aware. The Borrower will furnish to the Administrative Agent for distribution to each Lender prompt written notice of the following:

(a)the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or directly affecting the Borrower or any of its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect;

(b)the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, would reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $5,000,000; and

(c)any other development (excluding matters of a general economic, financial or political nature to the extent that they could not reasonably be expected to have a disproportionate effect on the Borrower) that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

SECTION 5.03.Existence; Conduct of Business. Each Obligor will do or

cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.04.Payment of Obligations. Each Obligor will pay its

    60

#4841-8625-7971v16

obligations, including tax liabilities and material contractual obligations, that, if not paid, could reasonably be expected to result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the applicable Obligor has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05.Maintenance of Properties; Insurance. (a) Each Obligor

will keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) each Obligor will maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar business operating in the same or similar locations.

SECTION 5.06.Books and Records; Inspection Rights. Each Obligor will

keep books of record and account in accordance with GAAP. Each Obligor will permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties during business hours, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested, in each case, to the extent such inspection or requests for such information are reasonable and such information can be provided or discussed without violation of law, rule, regulation or contract; provided that such Obligor shall be entitled to have its representatives and advisors present during any inspection of its books and records and during any discussion with its independent auditors; provided further that such Obligor shall not be responsible for the costs and expenses of the Administrative Agent and the Lenders for more than two such visits and inspections in any calendar year unless an Event of Default shall have occurred and be continuing.

SECTION 5.07.Compliance with Laws. Each Obligor will comply with all

laws, rules, regulations, including the Investment Company Act, any applicable rules, regulations or orders issued by the Securities and Exchange Commission thereunder and orders of any other Governmental Authority, applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Each Obligor will maintain in effect and enforce policies and procedures designed to ensure compliance by such Obligor, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

SECTION 5.08.Certain Obligations Respecting Subsidiaries; FurtherAssurances.

(a)Subsidiary Guarantors. In the event that any Obligor shall form or acquire

any new Subsidiary, the Borrower will cause, within 45 days of the formation or acquisition thereof, such new Subsidiary to become a “Subsidiary Guarantor” (and, thereby, an “Obligor”) under a Guarantee Assumption Agreement and to deliver such proof of corporate or other action,

    61

#4841-8625-7971v16

incumbency of officers, opinions of counsel and other documents as is consistent with those delivered by the Borrower pursuant to Section 4.01 upon the Restatement Effective Date or as the Administrative Agent shall have requested.

(b)Ownership of Subsidiaries. The Borrower will, and will cause each of its Subsidiaries to, take such action from time to time as shall be necessary to ensure that each of its Subsidiaries is a wholly owned Subsidiary.

(c)Further Assurances. Each Obligor will take such action from time to time as shall reasonably be requested by the Administrative Agent to effectuate the purposes and objectives of this Agreement. Without limiting the generality of the foregoing, each Obligor will take such action from time to time (including filing appropriate Uniform Commercial Code financing statements and executing and delivering such assignments, security agreements and other instruments) as shall be reasonably requested by the Administrative Agent

(i)to create, in favor of the Collateral Agent for the benefit of the Lenders (and any affiliate thereof that is a party to any Hedging Agreement entered into with the Borrower), perfected security interests and Liens in the Collateral; provided that any such security interest or Lien shall be subject to the relevant requirements of the Security

Documents,

(ii)subject to Section 7.04 of the Guarantee and Security Agreement, to cause any bank or securities intermediary (within the meaning of the Uniform Commercial Code) to enter into such arrangements with the Collateral Agent as shall be appropriate in order that the Collateral Agent has “control” over each bank account or securities account of the Obligors (other than Excluded Accounts (as defined in the Guarantee and Security Agreement)) and in that connection, the Borrower agrees to cause all cash and other proceeds of Portfolio Investments received by any Obligor to be promptly deposited into such an account (or otherwise delivered to, or registered in the name of, the Collateral Agent) and, until such deposit, delivery or registration such cash and other proceeds shall be held in trust by the Borrower for and as the property of the Collateral Agent and shall not be commingled with any other funds or property of such Obligor or other Person,

(iii)[Reserved],

(iv)[Reserved],

(v)in the event that any Obligor is acting as an agent or administrative agent under any loan documents with respect to any Bank Loan that does not constitute all of the credit extended to the underlying borrower under the relevant underlying loan documents, ensure that all funds held by such Obligor in such capacity as agent or administrative agent is segregated from all other funds of such Obligor and clearly identified as being held in an agency capacity, and

(vi)cause all credit or loan agreements, any notes and all assignment and assumption agreements relating to any Portfolio Investment constituting part of the

    62

#4841-8625-7971v16

Collateral to be held by (x) the Collateral Agent or (y) the Custodian pursuant to the terms of the Custodian Agreement (or another custodian reasonably satisfactory to the Administrative Agent), or pursuant to an appropriate intercreditor agreement, so long as the Custodian (or custodian) has agreed to grant access to such loan and other documents to the Administrative Agent pursuant to an access or similar agreement between the Borrower and such Custodian (or custodian) in form and substance reasonably satisfactory to the Administrative Agent; provided that the Borrower’s obligation to deliver underlying documentation may be satisfied by delivery of copies of such agreements.

Notwithstanding anything to the contrary contained herein, if any instrument, promissory note, agreement, document or certificate held by the Custodian is destroyed or lost not as a result of any action of the Borrower, then any original of such instrument, promissory note, agreement, document or certificate shall be deemed held by the Custodian for all purposes hereunder, provided that, when the Borrower has actual knowledge of any such destroyed or lost instrument, promissory note, agreement, document or certificate, it uses all commercially reasonable efforts to obtain from the underlying borrower, and deliver to the Custodian, a replacement instrument, promissory note, agreement, document or certificate.

SECTION 5.09.Use of Proceeds. The Borrower will use the proceeds of

the Loans only for general corporate purposes of the Borrower in the ordinary course of business, including making distributions not prohibited by the Loan Documents and the acquisition and funding (either directly or through one or more wholly-owned Subsidiary Guarantors) of Portfolio Investments; provided that neither the Administrative Agent nor any Lender shall have any responsibility as to the use of any of such proceeds. No part of the proceeds of any Loan will be used in violation of applicable law or, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock. Margin Stock shall be purchased by the Obligors only with the proceeds of Indebtedness not directly or indirectly secured by Margin Stock (within the meaning of Regulation U), or with the proceeds of equity capital of the Borrower. The Borrower will not request any Borrowing, and the Borrower shall not use, and shall procure that the Obligors and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

SECTION 5.10.Exemption from Registration under Investment CompanyAct. The Borrower shall maintain its exemption from registration under the Investment Company Act.

SECTION 5.11.Investment and Valuation Policies. The Borrower shall

    63

#4841-8625-7971v16

promptly advise the Lenders and the Administrative Agent of any material change in either its Investment Policies or Valuation Policy.

SECTION 5.12.Portfolio Valuation and Diversification, Etc.

(a) Industry Classification Groups. For purposes of this Agreement, the

Borrower, in its reasonable determination, shall assign each Portfolio Investment to an Industry Classification Group. To the extent that any such Portfolio Investment is not correlated with the risks of other Portfolio Investments in an Industry Classification Group established by Moody’s, such Portfolio Investment may be assigned by the Borrower to an Industry Classification Group that is more closely correlated to such Portfolio Investment. In the absence of any correlation, the Borrower shall be permitted, upon notice to the Administrative Agent for distribution to each Lender to create up to three additional industry classification groups for purposes of this Agreement.

(b) Portfolio Valuation, Etc.

(i)Settlement Date Basis. For purposes of this Agreement, all determinations of whether an investment is to be included as a Portfolio Investment shall be determined on a settlement-date basis (meaning that any investment that has been purchased will not be treated as a Portfolio Investment until such purchase has settled, and any Portfolio Investment which has been sold will not be excluded as a Portfolio Investment until such sale has settled), provided that no such investment shall be included as a Portfolio Investment to the extent it has not been paid for in full.

(ii)Determination of Values. The Borrower will conduct reviews of the value to be assigned to each of its Portfolio Investments as follows:

(A)Quoted Investments—External Review. With respect to Portfolio Investments (including Cash Equivalents) for which market quotations are readily available (“Quoted Investments”), the Borrower shall, not less frequently than once each calendar week, determine the market value of such Portfolio Investments which shall, in each case, be determined in accordance with one of the following methodologies (as selected by the Borrower):

(w)in the case of public and 144A securities, the average of the bid prices as determined by two Approved Dealers selected by the

Borrower,

(x)in the case of bank loans, the average of the bid prices as determined by two Approved Dealers selected by the Borrower or an Approved Pricing Service which makes reference to at least two Approved

Dealers with respect to such bank loans,

    64

#4841-8625-7971v16

(y)in the case of any Quoted Investment traded on an exchange, the closing price for such Portfolio Investment most recently posted on such exchange, and

(z)in the case of any other Quoted Investment, the fair market value thereof as determined by an Approved Pricing Service.

(B)Unquoted Investments—External Review. With respect to

Portfolio Investments for which market quotations are not readily available (“Unquoted Investments”), the Borrower shall value such Unquoted Investments quarterly in a manner consistent with its “Valuation Policy”, as the same may be amended, supplemented, waived or otherwise modified from time to time consistent with standard industry practice and in a manner not prohibited by this Agreement (the “Valuation Policy”), including valuation of at least 35% by value of all Unquoted Investments included in the Borrowing Base using the assistance of an Approved Third Party Appraiser; provided that each Unquoted Investment shall be so valued at least once per annum.

(C)Internal Review. The Borrower shall conduct an internal review of the aggregate value of the Portfolio Investments included in the Borrowing Base, and of the Borrowing Base, at least once each calendar week which shall take into account any events of which the Borrower has knowledge that materially adversely affects the aggregate value of the Portfolio Investments included in the Borrowing Base or the Borrowing Base. If, based upon such weekly internal review, the Borrower determines that a Borrowing Base Deficiency exists, then the Borrower shall, within five Business Days as provided in Section 5.01(c), deliver a Borrowing Base Certificate reflecting the new amount of the Borrowing Base and shall take the actions, and make the payments and prepayments, all as more specifically set forth in Section 2.09(c).

(D)Failure to Determine Values. If the Borrower shall fail to determine the value of any Portfolio Investment as at any date pursuant to the requirements of the foregoing sub-clauses (A) through (C), the “Value” of such Portfolio Investment as at such date shall be deemed to be zero.

(iii)Scheduled Testing of Values.

(A)Each February 28, April 30, July 31 and October 31 of each calendar year, commencing on April 30, 2016 (or such other dates as are agreed to by the Borrower and the Administrative Agent, but in no event less frequently than once per calendar quarter, each a “Valuation Testing Date”), the Administrative Agent through an Independent Valuation Provider will test the values determined pursuant to Section 5.12(b)(ii) above of those Portfolio

    65

#4841-8625-7971v16

Investments included in the Borrowing Base selected by the Administrative Agent; provided, that the aggregate fair value of such Portfolio Investments tested on any Valuation Testing Date will be equal to the Tested Amount (as defined below) (or as near thereto as reasonably practical). For the avoidance of doubt, Portfolio Investments that are part of the Collateral but not included in the

Borrowing Base shall not be subject to testing under this Section 5.12(b)(iii).

(B)For purposes of this Agreement, the “Tested Amount” shall be equal to approximately 25% of the aggregate value of all Unquoted Investments included in the Borrowing Base (as of the applicable Valuation Testing Date).

(C)With respect to any Portfolio Investment, if the value of such Portfolio Investment determined pursuant to Section 5.12(b)(ii) is not more than the lesser of (1) five (5) points more than the midpoint of the valuation range (expressed as a percent of par) provided by the Independent Valuation Provider (provided that the value of such Portfolio Investment is customarily quoted as a percentage of par) and (2) 110% of the midpoint of the valuation range provided by the Independent Valuation Provider, then the value for such Portfolio Investment determined in accordance with Section 5.12(b)(ii) shall be continue to be used as the “Value” for purposes of this Agreement. If the value of any Portfolio Investment determined pursuant to Section 5.12(b)(ii) is more than the lesser of the values set forth in clause (C)(1) and (2) (to the extent applicable), then for such Portfolio Investment, the “Value” for purposes of this Agreement shall become the lesser of (x) the highest value of the valuation range provided by the Independent Valuation Provider, (y) five (5) points more than the midpoint of the valuation range (expressed as a percent of par) provided by the Independent Valuation Provider (provided that the value of such Portfolio Investment is customarily quoted as a percentage of par) and (z) 110% of the midpoint of the valuation range provided by the Independent Valuation Provider. For the avoidance of doubt, any values determined by the Independent Valuation Provider pursuant to this Section 5.12(b)(iii) or Section 5.12(b)(iv) shall be used solely for purposes of determining the “Value” of a Portfolio Investment under this Agreement and shall not be deemed to be the fair value of such asset as required under ASC 820, for purposes of the Borrower’s financial statements and the Investment Company Act.

(iv)Supplemental Testing of Values.

(A)Notwithstanding the foregoing, the Administrative Agent, individually or at the request of the Required Lenders, shall at any time have the right to request, in its reasonable discretion, any Portfolio Investment included in the Borrowing Base with a value determined pursuant to Section 5.12(b)(ii) to be

    66

#4841-8625-7971v16

independently tested by the Independent Valuation Provider. There shall be no limit on the number of such tests that may be requested by the Administrative Agent in its reasonable discretion; provided that, all such tests shall be conducted in such a manner not disruptive in any material respect to the business of the Borrower. The Administrative Agent shall notify the Borrower of its receipt of the final results of any such test promptly upon its receipt thereof and shall provide a copy of such results and the related report to (i) the Borrower promptly upon receipt and (ii) any Lender upon such Lender’s request; provided that such Lender, if required, has entered into an agreement with the Independent Valuation Provider governing the use of the information contained in such report. If (x) the value determined pursuant to Section 5.12(b)(ii) is less than the value determined by the Independent Valuation Provider, then the value determined pursuant to Section 5.12(b)(ii) shall continue to be used as the “Value” for purposes of this Agreement and (y) if the value determined pursuant to Section 5.12(b)(ii) is greater than the value determined by the Independent Valuation Provider and the difference between such values is: (1) less than 5% of the value determined pursuant to Section 5.12(b)(ii), then the value determined pursuant to Section 5.12(b)(ii) shall continue to be used as the “Value” for purposes of this Agreement; (2) between 5% and 20% of the value determined pursuant to Section 5.12(b)(ii), then the “Value” of such Portfolio Investment for purposes of this Agreement shall become the average of the value determined pursuant to

Section 5.12(b)(ii) and the value determined by such Independent Valuation

Provider; and (3) greater than 20% of the value determined pursuant to Section 5.12(b)(ii), then the Borrower and the Administrative Agent shall retain an additional third-party appraiser and the “Value” of such Portfolio Investment for purposes of this Agreement shall become the average of the three valuations (with the Independent Valuation Provider’s value to be used as the “Value” until the third value is obtained). For the avoidance of doubt, Portfolio Investments that are part of the Collateral but which the Borrower has not expressly included in the Borrowing Base shall not be subject to testing under this Section 5.12(b)(iv).

(B)Except as otherwise provided herein, the Value of any Portfolio

Investment for which the Independent Valuation Provider’s value is used shall be the midpoint of the range (if any) determined by the Independent Valuation Provider. The Independent Valuation Provider shall apply a recognized valuation methodology that is commonly accepted by the business development company industry for valuing Portfolio Investments of the type being valued and held by the Obligors.

(C)All valuations shall be on a settlement date basis. For the avoidance of doubt, the Value of any Portfolio Investment determined in

    67

#4841-8625-7971v16

accordance with this Section 5.12 shall be the Value of such Portfolio Investment for purposes of this Agreement until a new Value for such Portfolio Investment is subsequently determined (or required to be determined) in good faith in accordance with this Section 5.12.

(D)The reasonable and documented out-of-pocket costs of any valuation reasonably incurred by the Administrative Agent under this Section 5.12 shall be at the expense of the Borrower.

(E)In addition, the values determined by the Independent Valuation

Provider shall be deemed to be “Information” hereunder and subject to Section 9.13 hereof.

SECTION 5.13.Calculation of Borrowing Base. For purposes of this

Agreement, the “Borrowing Base” shall be determined, as at any date of determination, as the sum of the products obtained by multiplying (x) the Value of each Portfolio Investment by (y) the applicable Advance Rate, provided that:

(a)the Advance Rate applicable to that portion of the aggregate Value of all Portfolio Investments issued by one or more members of any one consolidated group of corporations or other entities in accordance with GAAP exceeding 7.5% and less than 12.5% of the aggregate Value of all Unadjusted Eligible Portfolio Investments, shall be

50% of the otherwise applicable Advance Rate;

(b)the Advance Rate applicable to that portion of the aggregate Value of all Portfolio Investments issued by one or more members of any one consolidated group of corporations or other entities in accordance with GAAP exceeding 12.5% of the aggregate Value of all Unadjusted Eligible Portfolio Investments shall be 0%;

(c)the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments in (i) the largest Industry Classification Group that exceeds 20% of the aggregate Value of all Unadjusted Eligible Portfolio Investments and (ii) any other Industry Classification Group that exceeds 15% of the aggregate Value of all Unadjusted

Eligible Portfolio Investments shall, in each case be 0%;

(d)the Advance Rate applicable to CDO Securities (including collateralized loan obligations or other investments that similarly represent an investment in underlying levered portfolios), finance leases, joint ventures, investment funds and any other investment type not listed in the definition of “Advance Rate” below, shall be 0%;

(e)the aggregate Borrowing Base contribution of the Borrower’s investments in Cash, Cash Equivalents, Short-Term U.S. Government Securities, Performing First Lien Bank Loans, Second Out Portions of Performing Unitranche Bank Loans and

Performing Second Lien Bank Loans may not be less than 80% of the Borrowing Base;

    68

#4841-8625-7971v16

(f)the aggregate Borrowing Base contribution of the Borrower’s investments in Cash, Cash Equivalents, Short-Term U.S. Government Securities and Performing First Lien Bank Loans (collectively, the “Aggregate First Lien Contribution”) may not be less than (i) 40% of the Borrowing Base if the Obligors have in aggregate 15 or more Portfolio Investments, (ii) 45% of the Borrowing Base if the Obligors have in aggregate

12 or more but less than 15 Portfolio Investments, (iii) 50% of the Borrowing Base if the

Obligors have 10 or more but less than 12 Portfolio Investments, and (iv) 55% of the

Borrowing Base if the Obligors have 8 or more but less than 10 Portfolio Investments;

(g)(i) during the period from the Restatement Effective Date to and including the Commitment Termination Date, the Borrowing Base shall at all times include at least 12 individual Portfolio Investments and (ii) during the period after the Commitment Termination Date to the Maturity Date, the Borrowing Base shall at all times include at least 8 individual Portfolio Investments;

(h)Following the application of (a) through (g) above, if at any time the weighted average maturity of all Portfolio Investments (based on the Value of Portfolio

Investments to the extent included in the Borrowing Base) exceeds six (6) years, the Borrower shall specify which Portfolio Investments shall be removed from the calculation of the Borrowing Base (but not from the Collateral) such that the weighted average maturity of all Portfolio Investments included in the calculation of the Borrowing Base is no greater than 6 years (subject to all other constraints, limitations and restrictions set forth herein); and

(i)no Portfolio Investment may be included in the Borrowing Base until such time as such Portfolio Investment has been Delivered (as defined in the Guarantee and Security Agreement) to the Collateral Agent, and then only for so long as such Portfolio Investment continues to be Delivered as contemplated therein; provided that in the case of any Portfolio Investment in which the Collateral Agent has a first-priority perfected security interest pursuant to a valid Uniform Commercial Code filing (and for which no other method of perfection with a higher priority is possible), such Portfolio Investment may be included in the Borrowing Base so long as all remaining actions to complete “Delivery” are satisfied within 7 days of such inclusion.

For the avoidance of doubt, to avoid double-counting of excess concentrations,

any Advance Rate reductions set forth under this Section 5.13 shall be without duplication of any other such Advance Rate reductions.

As used herein, the following terms have the following meanings:

“Advance Rate” means, as to any Portfolio Investment and subject to adjustment

as provided in Section 5.13(a) through (g), (i) in the event that (A) the Obligors have in

    69

#4841-8625-7971v16

aggregate 15 or more Portfolio Investments and (B) the Aggregate First Lien Contribution is greater than or equal to 50% of the Borrowing Base, the applicable percentage as set forth in Table I below with respect to such Portfolio Investment, and (ii) in all other instances, the applicable percentage with respect to such Portfolio Investment as set forth in Table II below:

TABLE I

Portfolio Investment	Quoted	Unquoted
Cash, Cash Equivalents and
Short-Term U.S. Government Securities	100%	n.a.
Long-Term U.S. Government Securities	95%	n.a.
Performing First Lien Bank Loans	75%	65%
Second Out Portions of Performing Unitranche Bank Loans	70%	60%
Performing Second Lien Bank Loans	65%	55%
Performing Cash Pay High Yield Securities	55%	45%
Performing Covenant-Lite Loans	55%	45%
Performing Cash Pay Mezzanine Investments	50%	40%

TABLE II

The Advance Rates in Table I shall be subject to reduction based on the aggregate number of Portfolio Investments held by the Obligors and the percentage of the Borrowing Base attributable to the Aggregate First Lien Contribution as follows:

    70

#4841-8625-7971v16

Advance Rate Table	Number of Portfolio Investments	Percentage of the Aggregate First Lien Contribution to the Borrowing Base	Advance Rates
II(a)	Greater than or equal to 15	Less than 50%	Portfolio InvestmentCash, Cash Equivalents and Short-Term	Quoted	Unquoted
			U.S. Government Securities	100%	n.a.
			Long-Term U.S. Government Securities	95%	n.a.
			Performing First Lien Bank Loans	70%	60%
			Second Out Portions of Performing Unitranche Bank Loans	65%	55%
			Performing Second Lien Bank Loans	60%	50%
			Performing Cash Pay High Yield Securities	50%	40%
			Performing Covenant-Lite Loans	50%	40%
			Performing Cash Pay Mezzanine Investments	45%	35%

Advance Rate Table	Number of Portfolio Investments	Percentage of the Aggregate First Lien Contribution to the Borrowing Base	Advance Rates
II(b)	Greater than or equal to 12, but less than 15	Greater than or equal to 55%	Portfolio Investment Cash, Cash Equivalents and Short-Term   U.S. Government Securities	Quoted 100%	Unquoted n.a.
			Long-Term U.S. Government Securities	95%	n.a.
			Performing First Lien Bank Loans	70%	60%
			Second Out Portions of Performing Unitranche Bank Loans	65%	55%
			Performing Second Lien Bank Loans	60%	50%
			Performing Cash Pay High Yield Securities	50%	40%
			Performing Covenant-Lite Loans	50%	40%
			Performing Cash Pay Mezzanine Investments	45%	35%
II(c)	Greater than or equal to 12, but less than 15	Less than 55%	Portfolio Investment Cash, Cash Equivalents and Short-Term   U.S. Government Securities	Quoted 100%	Unquoted n.a.
			Long-Term U.S. Government Securities	95%	n.a.
			Performing First Lien Bank Loans	65%	55%

    71

#4841-8625-7971v16

			Second Out Portions of Performing Unitranche Bank Loans		60%		50%
			Performing Second Lien Bank Loans		55%		45%
			Performing Cash Pay High Yield Securities		45%		35%
			Performing Covenant-Lite Loans		45%		35%
			Performing Cash Pay Mezzanine Investments		40%		30%
II(d)	Greater than or equal to 10, but less than 12	Greater than or equal to 60%	Portfolio Investment Cash, Cash Equivalents and Short-Term   U.S. Government Securities		Quoted 100%		Unquoted n.a.
			Long-Term U.S. Government Securities		95%		n.a.
			Performing First Lien Bank Loans		65%		55%
			Second Out Portions of Performing Unitranche Bank Loans		60%		50%
			Performing Second Lien Bank Loans		55%		45%
			Performing Cash Pay High Yield Securities		45%		35%
			Performing Covenant-Lite Loans		45%		35%
			Performing Cash Pay Mezzanine Investments		40%		30%
Advance Rate Table	Number of Portfolio Investments	Percentage of the Aggregate First Lien Contribution to the Borrowing Base	Advance Rates
II(e)	Greater than or equal to 10, but less than 12	Less than 60%	Portfolio Investment Cash, Cash Equivalents and Short-Term   U.S. Government Securities	Quoted 100%		Unquoted n.a.
			Long-Term U.S. Government Securities	95%		n.a.
			Performing First Lien Bank Loans	60%		50%
			Second Out Portions of Performing Unitranche Bank Loans	55%		45%
			Performing Second Lien Bank Loans	50%		40%
			Performing Cash Pay High Yield Securities	40%		30%
			Performing Covenant-Lite Loans	40%		30%
			Performing Cash Pay Mezzanine Investments	35%		25%
II(f)	Greater than or equal to 8, but less than 10	Greater than or equal to 65%	Portfolio Investment Cash, Cash Equivalents and Short-Term   U.S. Government Securities	Quoted 100%		Unquoted n.a.
			Long-Term U.S. Government Securities	95%		n.a.
			Performing First Lien Bank Loans	60%		50%

    72

#4841-8625-7971v16

			Second Out Portions of Performing Unitranche Bank Loans	55%	45%
			Performing Second Lien Bank Loans	50%	40%
			Performing Cash Pay High Yield Securities	40%	30%
			Performing Covenant-Lite Loans	40%	30%
			Performing Cash Pay Mezzanine Investments	35%	25%
II(g)	Greater than or equal to 8, but less than 10	Less than 65%	Portfolio Investment Cash, Cash Equivalents and Short-Term   U.S. Government Securities	Quoted 100%	Unquoted n.a.
			Long-Term U.S. Government Securities	95%	n.a.
			Performing First Lien Bank Loans	55%	45%
			Second Out Portions of Performing Unitranche Bank Loans	50%	40%
			Performing Second Lien Bank Loans	45%	35%
			Performing Cash Pay High Yield Securities	35%	25%
			Performing Covenant-Lite Loans	35%	25%
			Performing Cash Pay Mezzanine Investments	30%	20%

“Bank Loans” means debt obligations (including, without limitation, term loans,

revolving loans, debtor-in-possession financings, the funded and unfunded portion of revolving credit lines and letter of credit facilities and other similar loans and investments including interim loans, bridge loans and senior subordinated loans) which are generally documented under documentation substantially similar to documents used under a syndicated loan or credit facility.

“Capital Stock” of any Person means any and all shares of corporate stock (however designated) of, and any and all other equity interests and participations representing ownership interests (including membership interests and limited liability company interests) in, such Person.

“Cash” has the meaning assigned to such term in Section 1.01 of the Credit Agreement.

“Cash Equivalents” has the meaning assigned to such term in Section 1.01 of this

Agreement, provided that for purposes of this Section 5.13 the reference to “one year” in clause (a) of such definition shall be deemed to be a reference to “one month”.

“Cash Pay Bank Loans” means First Lien Bank Loans, Second Lien Bank Loans, Unitranche Bank Loans and Covenant-Lite Loans as to which, at the time of determination, all of the interest on which is payable not less frequently than quarterly and for which not less than

    73

#4841-8625-7971v16

2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly or quarterly period (as applicable) is payable in cash.

“CDO Securities” means debt securities, equity securities or composite or

combination securities (i.e. securities consisting of a combination of debt and equity securities that are issued in effect as a unit), including synthetic securities that provide synthetic credit exposure to debt securities, equity securities or composite or combination securities, that entitle the holders thereof to receive payments that (i) depend on the cash flow from a portfolio consisting primarily of ownership interests in debt securities, corporate loans or asset-backed securities or (ii) are subject to losses owing to credit events (howsoever defined) under credit derivative transactions with respect to debt securities, corporate loans or asset-backed securities.

“Covenant-Lite Loans” means (i) any Quoted Investment that does not require the Borrower to comply with any financial covenants (including without limitation any covenant relating to a borrowing base, asset valuation or similar asset-based requirement) and that trades at a discount to par in excess of 15% and (ii) any Unquoted Investment that does not require the Borrower to comply with any financial covenants (including without limitation any covenant relating to a borrowing base, asset valuation or similar asset-based requirement), in each case regardless of whether compliance with one or more incurrence covenants is otherwise required by such loan.

“First Lien Bank Loan” means a Bank Loan (including any First Out Portion of

any Unitranche Bank Loan) that is entitled to the benefit of a first lien and first priority perfected security interest (subject to customary encumbrances and to any Permitted Prior Working Capital Lien) on a substantial portion of the assets of the respective borrower and guarantors obligated in respect thereof; provided that if the leverage ratio of the relevant borrower or borrower group under such Bank Loan at any time exceeds 4 to 1, only that portion of such Bank Loan which when added to all senior debt of such borrower or borrower group would cause the ratio of such sum to it or their EBITDA not to exceed 4 to 1 shall be treated as a First Lien Bank Loan and any portion in excess of such portion shall not be a First Lien Bank Loan and shall be deemed a

Second Lien Bank Loan. For purposes of this definition,

(a)the “leverage ratio” of any borrower or borrower group shall mean the ratio of the relevant portion of the relevant Bank Loan plus all senior debt of such borrower or borrower group to the sum of the EBITDA of such borrower or borrower group for the four quarters most recently ended (subject to customary adjustments resulting from fundamental corporate changes),

(b)“senior debt” shall mean all Indebtedness of such borrower or borrower group (other than such Bank Loan) that is secured (other than Indebtedness that is secured solely by the same collateral as such Bank Loan and on a basis junior thereto) or that is senior to or pari passu with such Bank Loan, and

    74

#4841-8625-7971v16

(c)“EBITDA” shall mean earnings before interest, taxes, depreciation and amortization plus such other adjustments as may be included in the definition of “EBITDA” (or similar defined term used for the purposes contemplated herein) in the relevant agreement relating to the applicable Portfolio Investment, provided that such adjustments are usual and customary and substantially comparable to market terms for substantially similar debt of other similarly situated borrowers at the time such relevant agreements are entered into as reasonably determined in good faith by the Borrower.

“First Out Portion” means, with respect to any Unitranche Bank Loan, (a) such

portion of such Unitranche Bank Loan which is not (and is not effectively) subject to any debt subordination or superpriority rights of other lenders following an event of default, and (b) any portion of such Unitranche Bank Loan deemed a “First Out Portion” pursuant to the proviso to the definition of “Second Out Portion”.

“High Yield Securities” means debt Securities (a) issued by public or private

issuers, (b) issued pursuant to an effective registration statement or pursuant to Rule 144A under the Securities Act (or any successor provision thereunder) and (c) that are not Cash Equivalents, Mezzanine Investments or Bank Loans.

“Long-Term U.S. Government Securities” means U.S. Government Securities

maturing more than one month from the applicable date of determination.

“Mezzanine Investments” means debt Securities (including convertible debt

Securities (other than the “in-the-money” equity component thereof)) (a) issued by public or private issuers, (b) issued without registration under the Securities Act, (c) not issued pursuant to Rule 144A under the Securities Act (or any successor provision thereunder), (d) that are not Cash Equivalents and (e) contractually subordinated in right of payment to other debt of the same issuer.

“Performing” means (a) with respect to any Portfolio Investment that is debt, the

issuer of such Portfolio Investment is not in default of any payment obligations in respect thereof, after the expiration of any applicable grace period and (b) with respect to any Portfolio Investment that is Preferred Stock, the issuer of such Portfolio Investment has not failed to meet any scheduled redemption obligations or to pay its latest declared cash dividend, after the expiration of any applicable grace period.

“Performing Cash Pay High Yield Securities” means High Yield Securities (a) as

to which, at the time of determination, not less than 2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly, quarterly, semi-annual or annual period (as applicable) is payable in cash and (b) which are Performing.

“Performing Cash Pay Mezzanine Investments” means Mezzanine Investments (a) as to which, at the time of determination, not less than 2/3rds of the interest (including

    75

#4841-8625-7971v16

accretions and “pay-in-kind” interest) for the current monthly, quarterly, semi-annual or annual period (as applicable) is payable in cash, and (b) which are Performing.

“Performing Covenant-Lite Loans” means Covenant-Lite Loans which are Cash Pay Bank Loans and are Performing.

“Performing First Lien Bank Loans” means First Lien Bank Loans which are Cash Pay Bank Loans and are Performing.

“Performing Second Lien Bank Loans” means Second Lien Bank Loans which

are Cash Pay Bank Loans and are Performing.

“Performing Unitranche Bank Loans” means Unitranche Bank Loans which are Cash Pay Bank Loans and are Performing.

“Permitted Prior Working Capital Lien” means, with respect to any borrower

under a Bank Loan, a security interest to secure a revolving facility for such borrower and any of its subsidiaries in the accounts receivable and inventory (and the proceeds thereof) of such borrower and any of its subsidiaries that are guarantors of such revolving facility; provided that (i) such Bank Loan has a second priority lien on such accounts receivable and inventory that is subject to the first priority lien of such revolving facility (or a pari passu lien on such collateral where the revolving facility has a super-priority right of payment), (ii) such revolving facility is not secured by any other assets (other than a pari passu lien or a second priority lien, subject to the first priority lien of the Bank Loan) and does not benefit from any standstill rights or other agreements (other than customary rights) with respect to any other assets and (iii) the funded amount of such revolving facility is not greater than 30% of the sum of the funded amount of such revolving facility plus the original principal amount of the associated First Lien Bank Loan (as determined at the inception of such Bank Loan or at the time of any later upsize of such Bank Loan).

“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to any shares (or other interests) of other Capital Stock of such Person, and shall include, without limitation, cumulative preferred, non-cumulative preferred, participating preferred and convertible preferred Capital Stock. “Second Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a

second lien and second priority perfected security interest (subject to customary encumbrances) on a substantial portion of the assets of the respective borrower and guarantors obligated in respect thereof and any portion of any Bank Loan that is deemed a Second Lien Bank Loan pursuant to the proviso to the first sentence of the definition of First Lien Bank Loan.

“Second Out Portion” means, with respect to any Unitranche Bank Loan, any

    76

#4841-8625-7971v16

portion of such Unitranche Bank Loan which is, or is effectively, subject to debt subordination and superpriority rights of other lenders following an event of default; provided that if all of the First Out Portion of any Unitranche Bank Loan is then a Portfolio Investment, the portion of such Unitranche Bank Loan that would otherwise be the “Second Out Portion” pursuant to the foregoing shall be deemed a First Out Portion.

“Securities” means common and preferred stock, units and participations, member

interests in limited liability companies, partnership interests in partnerships, notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, including debt instruments of public and private issuers and tax-exempt securities (including warrants, rights, put and call options and other options relating thereto, representing rights, or any combination thereof) and other property or interests commonly regarded as securities or any form of interest or participation therein, but not including Bank Loans.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Short-Term U.S. Government Securities” means U.S. Government Securities

maturing on a date that is one month after, or within one month of, the applicable date of determination.

“Unitranche Bank Loan” means a Bank Loan structured as a first lien senior

secured credit facility but representing combined economics of senior and second lien or subordinated debt pursuant to documentation substantially in the form of a “unitranche bank loan”.

“U.S. Government Securities” has the meaning assigned to such term in Section 1.01 of this Agreement.

“Value” means with respect to any Portfolio Investment, the most recent value as

determined pursuant to Section 5.12.

ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and

interest on each Loan and all fees due and payable hereunder (other than Unasserted Contingent Obligations) have been paid in full, the Borrower covenants and agrees with the Lenders that:

SECTION 6.01.Indebtedness. The Borrower will not, nor will it permit any

other Obligor to, create, incur, assume or permit to exist any Indebtedness, except:

(a)Indebtedness created hereunder or under any other Loan Document;

    77

#4841-8625-7971v16

(b)[Reserved];

(c)Other Permitted Indebtedness;

(d)Indebtedness of the Borrower to or from any other Obligor or Indebtedness of an Obligor to or from another Obligor;

(e)repurchase obligations arising in the ordinary course of business with respect to U.S. Government Securities that do not constitute Collateral;

(f)obligations payable to clearing agencies, brokers or dealers in connection with the purchase or sale of securities in the ordinary course of business;

(g)other Indebtedness in an aggregate amount not exceeding the Additional Debt Amount at any one time outstanding and that, taken together with Indebtedness permitted under clause (a) of this Section 6.01 (1) does not exceed, at the time it is incurred, the amount required to comply with the provisions of Section 6.07(b) and (2) will not result in the Covered Debt Amount, at the time it is incurred, exceeding the Borrowing Base, so long as no Default or Event of Default shall have occurred or be continuing after giving effect to the incurrence of such other indebtedness;

(h)[Reserved];

(i)[Reserved]; and

(j)obligations arising with respect to Hedging Agreements.

Notwithstanding the foregoing, the Borrower shall not, nor shall it permit any of its Subsidiaries to, enter into any total return swap.

SECTION 6.02.Liens. The Borrower will not, nor will it permit any other Obligor to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a)any Lien on any property or asset of the Borrower existing on the Restatement Effective Date and set forth in Part B of Schedule II, provided that (i) no such Lien shall extend to any other property or asset of the Borrower or any of its Subsidiaries and (ii) any such Lien shall secure only those obligations which it secures on the Restatement Effective Date and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(b)Liens created pursuant to the Security Documents;

    78

#4841-8625-7971v16

(c)Liens on Special Equity Interests included in the Portfolio Investments but only to the extent securing obligations in the manner provided in the definition of

“Special Equity Interests” in Section 1.01;

(d)Liens securing Indebtedness or other obligations in an aggregate principal amount not exceeding the Additional Debt Amount at any one time outstanding (which may cover Portfolio Investments, but only to the extent released from the Lien in favor of the Collateral Agent in accordance with the requirements of Section 10.03 of the Guarantee and Security Agreement), so long as at the time thereof and after giving effect thereto the Covered Debt Amount does not exceed the lower of (i) the Borrowing Base or (ii) the Adjusted Portfolio Investments Amount;

(e)Permitted Liens;

(f)[Reserved]; and

(g)Liens securing Indebtedness permitted under Section 6.01(e) and (f).

SECTION 6.03.Fundamental Changes and Dispositions of Assets. The Borrower will not, nor will it permit any other Obligor to, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution). The Borrower will not reorganize under the laws of a jurisdiction other than any jurisdiction in the United States. The Borrower will not, nor will it permit any other Obligor to, acquire any business or property from, or capital stock of, or be a party to any acquisition of, any Person, except for purchases or acquisitions of Portfolio Investments and other assets in the normal course of the day-to-day business activities of the Borrower and its Subsidiaries and not in violation of the terms and conditions of this Agreement or any other Loan Document. The Borrower will not, nor will it permit any other Obligor to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, any part of its assets, whether now owned or hereafter acquired, but excluding assets sold or disposed of in the ordinary course of business (including to make expenditures of cash in the normal course of the day-to-day business activities of the Borrower and its Subsidiaries).

Notwithstanding the foregoing provisions of this Section:

(a)any Subsidiary Guarantor of the Borrower may be merged or consolidated with or into the Borrower or any other Subsidiary Guarantor; provided that if any such transaction shall be between a Subsidiary Guarantor and a wholly owned Subsidiary Guarantor, the wholly owned Subsidiary Guarantor shall be the continuing or surviving corporation;

(b)any Obligor may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any wholly owned

Subsidiary Guarantor of the Borrower;

    79

#4841-8625-7971v16

(c)the capital stock of any Subsidiary of the Borrower may be sold, transferred or otherwise disposed of to the Borrower or any wholly owned Subsidiary Guarantor of the Borrower;

(d)[Reserved];

(e)[Reserved];

(f)[Reserved];

(g)the Borrower or the other Obligors may dissolve or liquidate any Subsidiary that does not own, legally or beneficially, assets (including, without limitation, Portfolio Investments) which in aggregate have a value of $500,000 or more at such time of dissolution or liquidation; and

(h)the Borrower and the other Obligors may sell, lease, transfer or otherwise dispose of equipment or other property or assets that do not consist of Portfolio Investments so long as the aggregate amount of all such sales, leases, transfer and dispositions does not exceed $1,000,000 in any fiscal year.

SECTION 6.04.Investments. The Borrower will not, nor will it permit any

other Obligor to, acquire, make or enter into, or hold, any Investments except:

(a)operating deposit accounts with banks;

(b)Investments by the Borrower and the Subsidiary Guarantors in the Borrower and the Subsidiary Guarantors;

(c)Hedging Agreements entered into in the ordinary course of any Obligor’s financial planning and not for speculative purposes;

(d)Portfolio Investments, by the Borrower and any of its Subsidiaries to the extent such Portfolio Investments are of the character of assets permitted to be acquired by business development companies under the Investment Company Act and are permitted by the Borrower’s Investment Policies; and

(e)additional Investments permitted under the Limited Partnership

Agreement up to but not exceeding $5,000,000 in the aggregate at any time outstanding.

For purposes of clause (e) of this Section, the aggregate amount of an Investment at any time shall be deemed to be equal to (A) the aggregate amount of cash, together with the aggregate fair market value of property, loaned, advanced, contributed, transferred or otherwise invested that gives rise to such Investment (calculated at the time such Investment is made) minus (B) the aggregate amount of dividends, distributions or other payments received in cash in respect of

    80

#4841-8625-7971v16

such Investment, provided that in no event shall the aggregate amount of such Investment be deemed to be less than zero; the amount of an Investment shall not in any event be reduced by reason of any write-off of such Investment nor increased by any increase in the amount of earnings retained in the Person in which such Investment or any other matter (other than any cash or assets contributed or invested in such Investment).

SECTION 6.05.Restricted Payments. The Borrower will not, nor will it

permit any other Obligor to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except that the Borrower may declare and pay Restricted Payments so long as (i) on the date of such Restricted Payment and after giving effect thereto (x) the Covered Debt Amount does not exceed 85% of the Borrowing Base and (y) no Default shall have occurred and be continuing and (ii) on the date of such Restricted Payment the Borrower delivers to the Administrative Agent and each Lender a Borrowing Base Certificate as at such date demonstrating compliance with subclause (x) after giving effect to such Restricted Payment. For purposes of preparing such Borrowing Base Certificate, (A) the Value of any Quoted Investment shall be the most recent quotation available for such Portfolio Investment and (B) the Value of any Unquoted Investment shall be the Value set forth in the Borrowing Base Certificate most recently delivered by the Borrower to the Administrative Agent and the Lenders pursuant to Section 5.01(d), provided that the Borrower shall reduce the Value of any Portfolio Investment referred to in this sub-clause (B) to the extent necessary to take into account any events of which the Borrower has knowledge that adversely affect the value of such Portfolio Investment.

Nothing herein shall be deemed to prohibit the payment of Restricted Payments

by any Subsidiary Guarantor of the Borrower to the Borrower or to any other Subsidiary Guarantor.

For the avoidance of doubt, the Borrower shall not declare any dividend to the

extent such declaration violates the provisions of the Investment Company Act applicable to it.

SECTION 6.06.Certain Restrictions on Subsidiaries. The Borrower will

not permit any of its Subsidiaries to enter into or suffer to exist any indenture, agreement, instrument or other arrangement (other than the Loan Documents) that prohibits or restrains, in each case in any material respect, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the granting of Liens, the declaration or payment of dividends, the making of loans, advances, guarantees or Investments or the sale, assignment, transfer or other disposition of property; provided that the foregoing shall not apply to (i) indentures, agreements, instruments or other arrangements pertaining to other Indebtedness permitted hereby (provided that such restrictions would not adversely affect the exercise of rights or remedies of the Administrative Agent or the Lenders hereunder or under the Security Documents or restrict any Subsidiary in any manner from performing its obligations under the Loan Documents) and (ii) indentures, agreements, instruments or other arrangements pertaining to any lease, sale or other disposition of any asset permitted by this Agreement or any Lien permitted by this Agreement on such asset so long as the applicable restrictions only apply to such assets.

    81

#4841-8625-7971v16

SECTION 6.07.Certain Financial Covenants.

(a) Minimum Borrower’s Shareholders’ Equity. The Borrower will not

permit Borrower’s Shareholders’ Equity at any time to be less than $75,000,000 (it being understood that for purposes of measuring such Shareholders’ Equity the Borrower shall not be required to value its Portfolio Investments on a more frequent basis than is required by Section 5.12(b)).

(b) Asset Coverage Ratio. (i) During the period from the Restatement

Effective Date through and including July 31, 2018, the Borrower will not permit the Asset

Coverage Ratio to be less than 2.00 to 1.00 at any time during such period, (ii) during the period from August 1, 2018 through and including July 31, 2019, the Borrower will not permit the Asset Coverage Ratio to be less than 2.25 to 1.00 at any time during such period, (iii) during the period from August 1, 2019 through and including July 31, 2020, the Borrower will not permit the Asset Coverage Ratio to be less than 2.50 to 1.00 at any time during such period, and (iv) at any time on and after August 1, 2020, the Borrower will not permit the Asset Coverage Ratio to be less than 3.00 to 1.00 at any time.

SECTION 6.08.Transactions with Affiliates. The Borrower will not, and

will not permit any other Obligors to enter into any transactions with any of its Affiliates, even if otherwise permitted under this Agreement, except (a) transactions at prices and on terms and conditions not less favorable, taken as a whole, to the Borrower or such other Obligor than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and any other Obligors not involving any other Affiliate, (c) Restricted Payments permitted by Section 6.05, (d) the transactions provided in the Affiliate Agreements delivered to each of the Lenders pursuant to Section 3.15 (as such agreements are amended, modified or supplemented from time to time in a manner not materially adverse to the Lenders), (e) transactions described or referenced on Schedule V, (f) any Investment that results in the creation of an Affiliate, (g) co-investment transactions with one or more affiliates as permitted by the SEC exemptive order issued on May 21, 2013 or as otherwise permitted by applicable law and SEC staff interpretations thereof, or (h) the payment of compensation and reimbursement of expenses and indemnification to directors in the ordinary course of business.

SECTION 6.09.Lines of Business. The Borrower will not, nor will it

permit any other Obligor to, engage in any business in a manner that would violate its Investment Policies in any material respect.

SECTION 6.10.No Further Negative Pledge. The Borrower will not, and

will not permit any other Obligors to, enter into any agreement, instrument, deed or lease which prohibits or limits in any material respect the ability of any Obligor to create, incur, assume or suffer to exist any Lien upon any of its properties, assets or revenues, whether now owned or hereafter acquired, or which requires the grant of any security for an obligation if security is granted for another obligation, except the following: (a) this Agreement and the other Loan Documents; (b) covenants in documents creating Liens permitted by Section 6.02 prohibiting

    82

#4841-8625-7971v16

further Liens on the assets encumbered thereby; (c) customary restrictions contained in leases not subject to a waiver; and (d) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Loan Documents on any Collateral securing the “Secured Obligations” under and as defined in the Guarantee and Security Agreement and does not require the direct or indirect granting of any Lien securing any Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Obligor to secure the Loans, or any Hedging Agreement.

SECTION 6.11.Modifications of Certain Documents. (a) The Borrower

will not consent to any modification, supplement or waiver of any of the Affiliate Agreements, unless such modification, supplement or waiver is not less favorable, taken as a whole, to the Borrower than could be obtained on an arm’s-length basis from unrelated third parties, in each case, without the prior consent of the Administrative Agent (with the approval of the Required Lenders).

Without limiting the foregoing, the Borrower may, at any time and from time to time, without the consent of the Administrative Agent or the Required Lenders, freely amend, restate, terminate, or otherwise modify any documents, instruments and agreements evidencing, securing or relating to Indebtedness permitted pursuant to Section 6.01(d), including increases in the principal amount thereof, modifications to the advance rates and/or modifications to the interest rate, fees or other pricing terms so long as following any such action such Indebtedness continues to be permitted under Section 6.01(d).

(b)     The Obligors shall not alter, amend or modify any of their charters, by-

laws or other formation or organizational documents in any manner materially adverse to the Lenders.

SECTION 6.12.Payments of Other Indebtedness. The Borrower will not,

nor will it permit any other Obligor to, purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of, any Indebtedness that is not then included in the Covered Debt Amount (other than the refinancing of such Indebtedness with Indebtedness permitted under Section 6.01), except for:

(a)regularly scheduled payments, prepayments or redemptions of principal and interest in respect thereof required pursuant to the instruments evidencing such Indebtedness (it being understood that: (w) the conversion features into Permitted Equity Interests under convertible notes; (x) the triggering of such conversion and/or settlement thereof solely with Permitted Equity Interests; and (y) any cash payment on account of interest on such convertible notes made by the Borrower in respect of such triggering and/or settlement thereof, shall be permitted under this clause (a));

    83

#4841-8625-7971v16

(b)payments and prepayments thereof required to comply with requirements of Section 2.09(c); and

(c)other payments and prepayments so long as at the time of and immediately after giving effect to such payment, (i) no Default shall have occurred and be continuing and (ii) if such payment were treated as a “Restricted Payment” for the purposes of determining compliance with Section 6.05, such payment would be permitted to be made under Section 6.05;

provided that, in the case of clauses (a) through (c) above, in no event shall any Obligor be permitted to prepay or settle (whether as a result of a mandatory redemption, conversion or otherwise) any such Indebtedness, if after giving effect thereto, the Covered Debt Amount would exceed the Borrowing Base.

ARTICLE VII

EVENTS OF DEFAULT

If any of the following events (“Events of Default”) shall occur and be

continuing:

(a)the Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b)the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or under any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five or more Business Days in the case of interest and fees or ten or more Business Days following notice thereof from the administrative Agent in the case of such other amounts;

(c)any representation or warranty made (or deemed made pursuant to Section 4.02) by or on behalf of any Obligor in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, shall prove to have been incorrect when made or deemed made in any material respect;

(d)any Obligor shall fail to observe or perform any covenant, condition or agreement contained in (i) Section 5.03 (with respect to such Obligor’s existence) or Sections 5.08(a) and (b), Section 5.09 or in Article VI or any Obligor shall default in the

    84

#4841-8625-7971v16

performance of any of its obligations contained in Section 7 of the Guarantee and Security Agreement, (ii) Section 5.02 or (iii) Sections 5.01(d) and (e) and such failure, in the case of this clause (iii), shall continue unremedied for a period of five or more days after notice thereof by the Administrative Agent (given at the request of any Lender) to such Obligor;

(e)a Borrowing Base Deficiency shall occur and continue unremedied for a period of five or more Business Days after delivery of a Borrowing Base Certificate demonstrating such Borrowing Base Deficiency pursuant to Section 5.01(e), provided that it shall not be an Event of Default hereunder if the Borrower shall present the Administrative Agent with a reasonably feasible plan to enable such Borrowing Base Deficiency to be cured within 30 Business Days (which 30-Business Day period shall include the five Business Days permitted for delivery of such plan), so long as such

Borrowing Base Deficiency is cured within such 30-Business Day period;

(f)any Obligor shall fail to observe or perform any covenant, condition or agreement applicable to it contained in this Agreement (other than those specified in clause (a), (b), (d), or (e) of this Article) or any other Loan Document and such failure shall continue unremedied for a period of 30 or more days after notice thereof from the

Administrative Agent (given at the request of any Lender) to such Obligor;

(g)the Borrower shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Borrower Material Indebtedness when and as the same shall become due and payable, taking into account (other than with respect to payments of principal) any applicable grace period;

(h)any event or condition occurs that results in any Borrower Material Indebtedness (i) becoming due prior to its scheduled maturity or (ii) that shall continue unremedied for any applicable period of time sufficient to enable or permit the holder or holders of any Borrower Material Indebtedness or any trustee or agent on its or their behalf to cause any Borrower Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity (for the avoidance of doubt, after giving effect to any applicable grace period), unless, in the case of this clause (ii), so long as the Commitments have not been terminated and the Loans declared due and payable in whole, such event or condition is no longer continuing or has been waived in accordance with the terms of such Borrower Material Indebtedness such that the holder or holders thereof or any trustee or agent on its or their behalf are no longer enabled or permitted to cause such Borrower Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (h) shall not apply (1) to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness or (2) to convertible debt

    85

#4841-8625-7971v16

that becomes due as a result of a conversion or redemption event, other than as a result of an “event of default”

(as defined in the documents governing such convertible Borrower Material

Indebtedness);

(i)an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Obligor or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Obligor or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed and unstayed for a period of 60 or more days or an order or decree approving or ordering any of the foregoing shall be entered;

(j)any Obligor shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Obligor or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(k)any Obligor shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(l)one or more judgments for the payment of money in an aggregate amount in excess of $5,000,000, shall be rendered against any Obligor or any combination of Obligorsand (i) the same shall remain undischarged for a period of 30 consecutive days following the entry of such judgment during which 30 day period such judgment shall not have been vacated, stayed, discharged or bonded pending appeal, or liability for such judgment amount shall not have been admitted by an insurer of reputable standing, or (ii) any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Obligor to enforce any such judgment;

(m)an ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, would reasonably be expected to result in a

Material Adverse Effect;

(n)a Change in Control shall occur;

    86

#4841-8625-7971v16

(o)CVC Credit Partners, LLC shall cease to be the investment advisor for the

Obligors;

(p)the Liens created by the Security Documents shall, at any time with respect to Portfolio Investments included in the Collateral Pool having an aggregate Value in excess of 5% of the aggregate Value of all Portfolio Investments included in the Collateral Pool, not be valid and perfected (to the extent perfection by filing, registration, recordation, possession or control is required herein or therein) in favor of the Collateral Agent, free and clear of all other Liens (other than Liens permitted under Section 6.02 or under the respective Security Documents); provided that if such default is as a result of any action of the Administrative Agent or Collateral Agent or a failure of the

Administrative Agent or Collateral Agent to take any action within its control, then there shall be no Default or Event of Default hereunder unless such default shall continue unremedied for a period of ten (10) consecutive Business Days after any Obligor receives written notice of such default thereof from the Administrative Agent unless the continuance thereof is a result of a failure of the Collateral Agent or Administrative

Agent to take an action within their control;

(q)except for expiration or termination in accordance with its terms, the Guarantee and Security Agreement or any other Security Document shall for whatever reason be terminated or cease to be in full force and effect in any material respect, or the enforceability thereof shall be contested by any Obligor;

(r)the Obligors shall at any time, without the consent of the Required

Lenders, (i) modify, supplement or waive in any material respect the Investment Policies (other than any modification, supplement or waiver required by any applicable law, rule or regulation), provided that it shall not be deemed a modification in any material respect of the Investment Policies if the permitted investment size of the Portfolio Investments proportionately increases as the size of the Borrower’s capital base changes, (ii) modify, supplement or waive in any material respect the Valuation Policy (other than any modification, supplement or waiver (x) required under GAAP, (y) required by any applicable law, rule or regulation, or (z) which provides for valuations more frequently than quarterly), (iii) fail to comply with the Valuation Policy or the Investment Policies in any material respect, and in the case of sub-clause (iii) of this clause (r), such failure shall continue unremedied for a period of 30 or more days after the earlier of notice thereof by the Administrative Agent (given at the request of any Lender) to the Borrower or knowledge thereof by a Financial Officer of any Obligor, or (iv) modify, supplement or waive in any manner material and adverse to the Lenders the definitions of

“Commitment”, “Commitment Period”, “Primary New Asset Commitment”, “Secondary New Asset Commitment”, “Seed Assets” or “Seed Commitment”, or Sections 3

(Commitments) or 4 (Contributions), in each case, as set forth in the Limited Partnership Agreement (it being understood that any modification, supplement or waiver that reduces

    87

#4841-8625-7971v16

the amount of any such “Commitment” or restricts the ability to deliver a Capital Call Notice would be material and adverse to the Lenders); or

(s)any Undrawn New Asset Commitment (as defined in the Limited

Partnership Agreement as in effect on the date hereof) is used to acquire a New Asset (as defined in the Limited Partnership Agreement as in effect on the date hereof) that is not held by an Obligor;

then, and in every such event (other than an event with respect to any Obligor described in clause (i) or (j) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to any Obligor described in clause (i) or (j) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

Each of the Lenders hereby irrevocably appoints the Administrative Agent as its

agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the

Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

The Person serving as the Administrative Agent hereunder shall have the same

rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

The Administrative Agent shall not have any duties or obligations except those

expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied

    88

#4841-8625-7971v16

duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise in writing by the Required

Lenders, and (c) except as expressly set forth herein and in the other Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein or therein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any

liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

The Administrative Agent may perform any and all its duties and exercise its

rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

    89

#4841-8625-7971v16

The Administrative Agent may resign at any time by notifying the Lenders and

the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent of the Borrower not to be unreasonably withheld (or, if an Event of Default has occurred and is continuing in consultation with the Borrower), to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent’s resignation shall nonetheless become effective except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and (2) the Required Lenders shall perform the duties of the Administrative Agent (and all payments and communications provided to be made by, to or through the Administrative

Agent shall instead be made by or to each Lender directly) until such time as the Required Lenders appoint a successor agent as provided for above in this paragraph. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent.

Each Lender acknowledges that it has, independently and without reliance upon

the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

Except as otherwise provided in Section 9.02(b) with respect to this Agreement,

the Administrative Agent may, with the prior consent of the Required Lenders (but not otherwise), consent to any modification, supplement or waiver under any of the Loan Documents, provided that, without the prior consent of each Lender, the Administrative Agent shall not (except as provided herein or in the Security Documents) release all or substantially all of the Collateral or otherwise terminate all or substantially all of the Liens under any Security Document providing for collateral security, agree to additional obligations being secured by all or substantially all of such collateral security, alter the relative priorities of the obligations entitled to the benefits of the Liens created under the Security Documents with respect to all or

    90

#4841-8625-7971v16

substantially all of the Collateral, except that no such consent shall be required, and the Administrative Agent is hereby authorized to (1) release any Lien covering property that is the subject of either a disposition of property permitted hereunder or a disposition to which the Required Lenders have consented, and (2) spread any Liens to any Hedging Agreement Obligations (as such term is defined in the Guarantee and Security Agreement) in accordance with the Guarantee and Security Agreement.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01.Notices; Electronic Communications

(a)Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or e-mail, as follows:

(i)if to the Borrower, to it at 712 Fifth Avenue, New York, NY 10019,

Attention: David DeSantis (e-mail: ddesantis@northportcapital.com);

(ii)if to the Administrative Agent, to JPMorgan Loan Services, 500 Stanton

Christiana Road, Ops 2, 3rd Floor Newark, DE 19713, Attention of Loan and Agency

Services Group (fax: 1-302-634-4733);

(iii)if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Any party hereto may change its address, e-mail or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b)Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless otherwise notified by the Administrative Agent to the Borrower, the Borrower may satisfy its obligation to deliver

    91

#4841-8625-7971v16

documents or notices to the Administrative Agent or the Lenders under Sections 5.01 and 5.12(a) by delivering an electronic copy to: covenant.compliance@jpmorgan.com with copy to lauren.mayer@jpmorgan.com, hannah.j.needham@jpmorgan.com and michael.e.kusner@jpmorgan.com, or such other e-mail address(es) as provided to the Borrower in a notice from the Administrative Agent (and the Administrative Agent shall promptly provide notice thereof to the Lenders).

Unless the Administrative Agent otherwise prescribes, (i) notices and other

communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

In no event shall the Administrative Agent or any Lender have any liability to the Borrower or any other Person for damages of any kind (whether in tort contract or otherwise) arising out of any transmission of communications through the internet, except in the case of direct damages, to the extent such damages are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the fraud, willful misconduct or gross negligence of such relevant Person.

(c)Documents to be Delivered under Sections 5.01 and 5.12(a). For so long

as an Intralinks™ or equivalent website is available to each of the Lenders hereunder, the Borrower may satisfy its obligation to deliver documents to the Administrative Agent or the Lenders under Sections 5.01 and 5.12(a) by delivering either an electronic copy in the manner specified in Section 9.01(b) or a notice identifying the website where such information is located for posting by the Administrative Agent on Intralinks™ or such equivalent website, provided that the Administrative Agent shall have no responsibility to maintain access to intralinks or an equivalent website.

SECTION 9.02.Waivers; Amendments.

(a)No Deemed Waivers; Remedies Cumulative. No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Obligor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the

    92

#4841-8625-7971v16

specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time.

(b)Amendments to this Agreement. Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall

(i)increase the Commitment of any Lender without the written consent of such Lender,

(ii)reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each

Lender directly affected thereby,

(iii)postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby,

(iv)change Section 2.17(b), (c) or (d) in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly affected thereby, or

(v)change any of the provisions of this Section or the definition of the term “Required Lenders” or any other provision hereof specifying the number or percentage of

Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;

provided further that (x) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent and (y) the consent of Lenders holding not less than two-thirds of the Revolving Credit Exposure and unused Commitments will be required (A) for any adverse change (from the Lenders’ perspective) affecting the provisions of this Agreement relating to the calculation of the Borrowing Base (excluding changes to the provisions of Section 5.12(b)(iii) or (iv), but including changes to the definitions set forth in Section 5.13) unless otherwise expressly provided herein and (B) for any release of Collateral other than for fair value or as otherwise permitted hereunder or under the other Loan Documents.

    93

#4841-8625-7971v16

For purposes of this Section, the “scheduled date of payment” of any amount shall refer to the date of payment of such amount specified in this Agreement, and shall not refer to a date or other event specified for the mandatory or optional prepayment of such amount. In addition, whenever a waiver, amendment or modification requires the consent of a Lender “affected” thereby, such waiver, amendment or modification shall, upon consent of such Lender, become effective as to such Lender whether or not it becomes effective as to any other Lender, so long as the Required Lenders consent to such waiver, amendment or modification as provided above.

(c) Amendments to Security Documents. No Security Document nor any

provision thereof may be waived, amended or modified, nor may the Liens thereof be spread to secure any additional obligations (excluding the spreading of such Liens to any Hedging Agreement Obligations (as such term is defined in the Guarantee and Security Agreement) as provided for in the Guarantee and Security Agreement) except pursuant to an agreement or agreements in writing entered into by the Borrower, and by the Collateral Agent with the consent of the Required Lenders; provided that, except as otherwise expressly permitted by the Loan Documents, (i) without the written consent of each Lender, no such agreement shall release all or substantially all of the Obligors from their respective obligations under the Security Documents and (ii) without the written consent of each Lender, no such agreement shall release all or substantially all of the collateral security or otherwise terminate all or substantially all of the Liens under the Security Documents, alter the relative priorities of the obligations entitled to the Liens created under the Security Documents (except in connection with securing additional obligations equally and ratably with the Loans and other obligations hereunder) with respect to all or substantially all of the collateral security provided thereby, or release all or substantially all of the guarantors under the Guarantee and Security Agreement from their guarantee obligations thereunder, except that no such consent shall be required, and the Administrative Agent is hereby authorized (and so agrees with the Borrower) to direct the Collateral Agent under the Guarantee and Security Agreement to, and in addition to the rights of such parties under the Guarantee and Security Agreement, the Administrative Agent and the Collateral Agent under the Guarantee and Security Agreement may (in addition to the rights of such parties under the Guarantee and Security Agreement), release any Lien covering property (and to release any such guarantor) that is the subject of either a disposition of property permitted hereunder or a disposition to which the Required Lenders have consented.

(d) Replacement of Non-Consenting Lender. If, in connection with any

proposed change, waiver, discharge or termination to any of the provisions of this Agreement as contemplated by this Section 9.02 that has been approved by the Required Lenders, the consent of one or more Lenders whose consent is required for such proposed change, waiver, discharge or termination is not obtained, then (so long as no Event of Default has occurred and is continuing) the Borrower shall have the right, at its sole cost and expense, to replace each such non-consenting Lender or Lenders with one or more replacement Lenders pursuant to Section 2.19(b) so long as at the time of such replacement, each such replacement Lender consents to the proposed change, waiver, discharge or termination.

SECTION 9.03.Expenses; Indemnity; Damage Waiver.

    94

#4841-8625-7971v16

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable and

documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable and documented fees, charges and disbursements of one outside counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), subject to any limitation previously agreed in writing, (ii) all documented out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the documented fees, charges and disbursements of one outside counsel (and any additional outside counsel should any conflict of interest arise) for the Administrative Agent or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made, including all such documented out-ofpocket expenses incurred during any workout, restructuring or negotiations in respect thereof and (iii) and all reasonable and documented out-of-pocket costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Security Document or any other document referred to therein.

(b) Indemnification by the Borrower. The Borrower shall indemnify the

Administrative Agent, the Collateral Agent, the Joint Lead Arrangers and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (other than Taxes or Other Taxes which shall only be indemnified by the Borrower to the extent provided in Section 2.16), including the reasonable fees, charges and disbursements of any outside counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have arisen from the bad faith, willful misconduct or gross negligence of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

The Borrower shall not be liable to any Indemnitee for any special, indirect,

consequential or punitive damages arising out of, in connection with, or as a result of the Transactions asserted by an Indemnitee against the Borrower or any other Obligor, provided that the foregoing

    95

#4841-8625-7971v16

limitation shall not be deemed to impair or affect the obligations of the Borrower under the preceding provisions of this subsection.

(c) Reimbursement by Lenders. To the extent that the Borrower fails to pay

any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent in its capacity as such.

(d) Waiver of Consequential Damages, Etc. To the extent permitted by

applicable law, the Borrower shall not assert, and hereby waives, any claim against any

Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or the use of the proceeds thereof.

(e) Payments. All amounts due under this Section shall be payable promptly

after written demand therefor.

SECTION 9.04.Successors and Assigns.

(a) Assignments Generally. The provisions of this Agreement shall be

binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders.

(i)Assignments Generally. Subject to the conditions set forth in clause (ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

    96

#4841-8625-7971v16

(A)the Borrower, provided, that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, or, if an Event of Default has occurred and is continuing, any other assignee; provided further, that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof; and (B)the Administrative Agent.

(ii)Certain Conditions to Assignments. Assignments shall be subject to the following additional conditions:

(A)except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the

Administrative Agent) shall not be less than U.S. $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

(B)each partial assignment of Commitments or Loans shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement in respect of such Commitments or Loans;

(C)the parties to each assignment shall execute and deliver to the

Administrative Agent an Assignment and Assumption in substantially the form of

Exhibit A hereto, together with a processing and recordation fee of U.S. $3,500 (which fee shall not be payable in connection with an assignment to a Lender or to an Affiliate of a Lender) (for which the Borrower and the Guarantors shall not be obligated); and

(D)the assignee, if it shall not already be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire;

(E)unless a Default or Event of Default has occurred and is continuing, such assignee is not a Competitor.

(iii)Effectiveness of Assignments. Subject to acceptance and recording thereof pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption,

    97

#4841-8625-7971v16

have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and

Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03 with respect to facts and circumstances occurring prior to the effective date of such assignment). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

(c) Maintenance of Registers by Administrative Agent. The Administrative

Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in New York City a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Registers” and each individually, a “Register”). The entries in the Registers shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Registers pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Registers shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Acceptance of Assignments by Administrative Agent. Upon its receipt of

a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(e)Participations. Any Lender may, without the consent of the Borrower, sell

participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitments and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement and the other Loan Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Loan Documents. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment,

    98

#4841-8625-7971v16

modification or waiver of any provision of this Agreement or any other Loan Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17(d) as though it were a Lender hereunder. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Commitments or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

(f)Limitations on Rights of Participants. A Participant shall not be entitled to receive any greater payment under Section 2.14, 2.15 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16 as though it were a Lender and in the case of a Participant claiming exemption for portfolio interest under Section 871(h) or 881(c) of the Code, the applicable Lender shall provide the Borrower with satisfactory evidence that the participation is in registered form and shall permit the Borrower to review such register as reasonably needed for the Borrower to comply with its obligations under applicable laws and regulations.

(g)Certain Pledges. Any Lender may at any time pledge or assign a security

interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or assignment to a Federal Reserve Bank or any central bank having jurisdiction over such Lender, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

(h)No Assignments to Natural Persons or the Borrower or its Affiliates orSubsidiaries. Anything in this Section to the contrary notwithstanding, no Lender may assign or

    99

#4841-8625-7971v16

participate any interest in any Loan held by it hereunder to (i) any natural person or (ii) the Borrower or any of its Affiliates or Subsidiaries.

SECTION 9.05.Survival. All covenants, agreements, representations and

warranties made by the any Obligor herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06.Counterparts; Integration; Effectiveness; ElectronicExecution.

(a)Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract between and among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page to this Agreement by email or telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

(b)Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

SECTION 9.07.Severability. Any provision of this Agreement held to be

    100

#4841-8625-7971v16

invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08.Right of Setoff. If an Event of Default shall have occurred

and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in any currency) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be contingent or unmatured, or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such Indebtedness. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. Each Lender agrees promptly to notify the Administrative Agent of any such setoff and application made by such Lender.

SECTION 9.09.Governing Law; Jurisdiction; Etc.

(a) Governing Law. This Agreement and the other Loan Documents shall be

construed in accordance with and governed by the law of the State of New York.

(b) Submission to Jurisdiction. The Borrower hereby irrevocably and

unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

(c) Waiver of Venue. The Borrower hereby irrevocably and unconditionally

waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

    101

#4841-8625-7971v16

(d) Service of Process. Each party to this Agreement irrevocably consents to

service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.10.WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,

ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING

DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT

OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON

CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES

THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS

REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD

NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER

AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11.[Reserved].

SECTION 9.12.Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. None of the Joint Lead Arrangers or the Syndication Agent shall have any responsibility under this Agreement.

SECTION 9.13.Treatment of Certain Information; Confidentiality.

(a)Treatment of Certain Information. The Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Subsidiaries (in connection with this Agreement or otherwise) by any Lender or by one or more subsidiaries or affiliates of such Lender and the Borrower hereby authorizes each Lender to share any information delivered to such Lender by the Borrower or its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such subsidiary or affiliate, it being understood that any such subsidiary or affiliate receiving such information shall be bound by the provisions of paragraph (b) of this Section as if it were a Lender hereunder. Such authorization shall survive the repayment of the Loans and the Commitments or the termination of this Agreement or any provision hereof.

(b)Confidentiality. Each of the Administrative Agent, the Lenders and the Joint Lead Arrangers agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of

    102

#4841-8625-7971v16

such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it or its Affiliates (including any self-regulatory authority), (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) to any pledgee pursuant to Section 9.04(g), (vi) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder,

(vii) subject to an agreement containing provisions substantially the same as those of this Section, to (w) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement; provided that, such Person would be permitted to be an assignee or participant pursuant to the terms hereof, (x) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations; provided that, such Person would be permitted to be an assignee or participant pursuant to the terms hereof, (y) any rating agency or credit insurance provider or (z) the CUSIP Service Bureau or any similar organization, (viii) with the consent of the Borrower, (ix) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower or its Affiliates.

For purposes of this Section, “Information” means all information received from the Borrower or its Subsidiaries relating to the Borrower or its Subsidiaries or any of their respective businesses or any Portfolio Investment, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or its Subsidiaries, provided that, in the case of information received from the Borrower or its Subsidiaries after the Restatement Effective Date, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

SECTION 9.14.USA PATRIOT Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with said Act.

SECTION 9.15.Acknowledgment and Consent to Bail-In of EEA FinancialInstitutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

    103

#4841-8625-7971v16

(a)the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b)the effects of any Bail-In Action on any such liability, including, if

applicable:

(i)a reduction in full or in part or cancellation of any such liability;

(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

SECTION 9.16.No Fiduciary Duty. Each Lender and its Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Obligors, their stockholders and/or their affiliates. Each Obligor agrees that nothing in the Agreement or the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Obligor, its stockholders or its affiliates, on the other. The Obligors acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Obligors, on the other, and (ii) solely in connection therewith and solely with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Obligor, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Obligor, its stockholders or its Affiliates on other matters) or any other obligation to any Obligor except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of any Obligor, its management, stockholders, creditors or any other Person. Each Obligor acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to the transactions contemplated by the Loan Documents and the process leading thereto. Each Obligor agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to such Obligor, solely in connection with the transactions contemplated by the Loan Documents or the process leading thereto.

SECTION 9.17.Termination. Promptly upon the Termination Date, the Administrative Agent shall direct the Collateral Agent to, on behalf of the Administrative Agent,

    104

#4841-8625-7971v16

the Collateral Agent and the Lenders, deliver to the Borrower such termination statements and releases and other documents necessary or appropriate to evidence the termination of this Agreement, the Loan Documents, and each of the documents securing the obligations hereunder as the Borrower may reasonably request, all at the sole cost and expense of the Borrower.

SECTION 9.18.Lender Representations. Until such time as the Borrower

becomes a registered investment company pursuant to the Investment Company Act (or is exempted from registration thereto other than pursuant to Section 3(c)(7) of the Investment Company Act) and pursuant to the terms of this Agreement, each Lender and each Participant hereby represents and warrants that it is a “qualified purchaser” within the meaning of the Investment Company Act.

[Signature pages follow]

    105

#4841-8625-7971v16

#4841-8625-7971v16

#4841-8625-7971v16

#4841-8625-7971v16

#4841-8625-7971v16

#4841-8625-7971v16

#4841-8625-7971v16

EX-12.1

Exhibit 12.1

STATEMENT REGARDING COMPUTATION OF RATIOS OF EARNINGS
	Nine Months Ended			Year Ended		Year Ended		Year Ended		Year Ended
	September 30,			December 31,		December 31,		December 31,		December 31,
	2016			2015		2014		2013		2012
	(unaudited)
Earnings:
Pretax income (loss) from continuing operations	$	(17,728,560	)	$	12,300,467	$	58,990,678	$	45,411,712	$	79,045,303
Fixed charges	46,599,147			65,690,634		45,508,411		61,038,847		42,809,788
Total earnings before fixed charges and preferred shares	$	28,870,587		$	77,991,101	$	104,499,089	$	106,450,559	$	121,855,091
Fixed Charges:
Interest (expensed and capitalized)	$	37,166,766		$	56,308,779	$	38,430,444	$	52,518,198	$	38,027,275
Amortized premiums, discounts      and capitalized expenses related to indebtedness	9,414,742			9,344,049		7,042,845		8,491,437		4,765,109
Estimate of interest within rental expenses	17,639			37,806		35,122		29,212		17,404
Total fixed charges	$	46,599,147		$	65,690,634	$	45,508,411	$	61,038,847	$	42,809,788
Preferred stock dividend	$	18,076,695		$	24,437,458	$	17,175,869	$	7,221,041	$	1,243,971
Carrying value in excess of consideration paid for preferred shares	$	(1,500,190	)	$	—	$	—	$	—	$	—
Ratio of earnings to combined fixed charges (1)	0.62			1.19		2.30		1.74		2.85
Ratio of earnings to combined fixed charges   and preferred stock dividends (1)	0.46			0.87		1.67		1.56		2.77

(1) The Company did not have any shares of preferred stock outstanding until June 2012 and paid its first preferred stock dividend in July 2012.

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Robert C. Lieber, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended September 30, 2016 of Resource Capital Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 14, 2016	/s/ Robert C. Lieber
	Robert C. Lieber
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David J. Bryant, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended September 30, 2016 of Resource Capital Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 14, 2016	/s/ David J. Bryant
	David J. Bryant
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource Capital Corp. (the "Company") on Form 10-Q for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert C. Lieber, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 14, 2016	/s/ Robert C. Lieber
	Robert C. Lieber
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource Capital Corp. (the "Company") on Form 10-Q for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David J. Bryant, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 14, 2016	/s/ David J. Bryant
	David J. Bryant
	Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 10, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	RESOURCE CAPITAL CORP.
Entity Central Index Key	0001332551
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		31,062,805

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
ASSETS:
Cash and cash equivalents	[1]	$ 114,552	$ 78,756
Restricted cash	[1]	5,701	40,635
Investment securities, trading	[1]	3,747	25,550
Investment securities available-for-sale, pledged as collateral, at fair value	[1]	82,114	162,306
Investment securities available-for-sale, at fair value	[1]	154,591	45,782
Loans held for sale ($197.6 million and $94.5 million at fair value)	[1]	197,615	95,946
Loans, pledged as collateral and net of allowances of $9.4 million and $47.1 million	[1]	1,406,581	2,160,751
Investments in unconsolidated entities	[1]	88,149	50,030
Derivatives, at fair value	[1]	4,052	3,446
Interest receivable	[1]	6,623	14,009
Deferred tax asset, net	[1]	5,565	12,646
Principal paydown receivable	[1]	44,600	17,941
Direct financing leases, net of allowances of $0.5 million	[1]	571	931
Intangible assets	[1]	25,886	26,228
Prepaid expenses	[1]	4,615	3,180
Other assets	[1]	12,516	22,295
Total assets	[1]	2,157,478	2,760,432
LIABILITIES:
Borrowings	[2]	1,401,842	1,895,288
Distribution payable	[2]	17,022	17,351
Accrued interest expense	[2]	4,913	5,604
Derivatives, at fair value	[2]	2,158	3,941
Accrued tax liability	[2]	51	549
Accounts payable and other liabilities	[2]	12,933	10,939
Total liabilities	[2]	1,438,919	1,933,672
EQUITY
Common stock, par value $0.001: 125,000,000 shares authorized; 31,071,737 and 31,562,724 shares issued and outstanding (including 496,756 and 691,369 unvested restricted shares)		31	32
Additional paid-in capital		1,218,907	1,228,346
Accumulated other comprehensive income (loss)		6,909	(2,923)
Distributions in excess of earnings		(506,107)	(406,603)
Total stockholders’ equity		719,752	818,864
Non-controlling interests		(1,193)	7,896
Total equity		718,559	826,760
TOTAL LIABILITIES AND EQUITY		2,157,478	2,760,432
Preferred Shares - Series A
EQUITY
Preferred stock, par value $0.001		1	1
Preferred Shares - Series B
EQUITY
Preferred stock, par value $0.001		6	6
Preferred Shares - Series C
EQUITY
Preferred stock, par value $0.001		$ 5	$ 5

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

[2] September 30, 2016 December 31, 2015Liabilities of consolidated VIEs included in the total liabilities above: Borrowings $528,971 $1,032,581 Accrued interest expense500 923 Derivatives, at fair value— 3,346 Accounts payable and other liabilities147 (117) Total liabilities of consolidated VIEs$529,618 $1,036,733

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
ASSETS:
Loans, pledged as collateral, amount at fair value	$ 197,600	$ 94,500
Loans receivable, allowance	9,400	47,100
Provision (recovery) for loan and lease losses	$ 9,898	$ 47,536
STOCKHOLDERS’ EQUITY
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred stock, shares authorized (in shares)	100,000,000.0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	125,000,000	125,000,000
Common stock, shares issued (in shares)	31,071,737	31,562,724
Common stock, shares outstanding (in shares)	31,071,737	31,562,724
Common stock, shares issued, non-vested restricted shares (in shares)	496,756	691,369
Assets of consolidated Variable Interest Entities (VIEs) included in the total assets above:
Cash and cash equivalents	$ 0	$ 95
Restricted cash	5,473	39,061
Investment securities available-for-sale, pledged as collateral, at fair value	0	66,137
Loans held for sale	0	1,475
Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million	801,742	1,416,441
Interest receivable	3,389	6,592
Prepaid expenses	21	238
Principal paydown receivable	44,600	17,800
Other assets	253	833
Total assets of consolidated VIEs	855,478	1,548,672
Liabilities of consolidated VIEs included in the total liabilities above:
Borrowings	528,971	1,032,581
Accrued interest expense	500	923
Derivatives, at fair value	0	3,346
Accounts payable and other liabilities	147	(117)
Total liabilities of consolidated VIEs	529,618	1,036,733
Loan allowances, VIEs	$ 827,000	$ 42,800
Preferred Shares - Series A
STOCKHOLDERS’ EQUITY
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25
Preferred stock, coupon authorized (in hundredths)	8.50%
Preferred stock, shares issued (in shares)	1,069,016	1,069,016
Preferred stock, shares outstanding (in shares)	1,069,016	1,069,016
Preferred Shares - Series B
STOCKHOLDERS’ EQUITY
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25
Preferred stock, coupon authorized (in hundredths)	8.25%
Preferred stock, shares issued (in shares)	5,544,579	5,740,479
Preferred stock, shares outstanding (in shares)	5,544,579	5,740,479
Preferred Shares - Series C
STOCKHOLDERS’ EQUITY
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25
Preferred stock, coupon authorized (in hundredths)	8.625%
Preferred stock, shares issued (in shares)	4,800,000	4,800,000
Preferred stock, shares outstanding (in shares)	4,800,000	4,800,000
Direct Financing Leases
ASSETS:
Provision (recovery) for loan and lease losses	$ 465	$ 465

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest income:
Loans	$ 26,003	$ 32,497	$ 89,227	$ 92,623
Securities	4,602	4,866	13,691	14,418
Leases	(22)	(8)	(37)	250
Interest income - other	769	968	4,317	2,919
Total interest income	31,352	38,323	107,198	110,210
Interest expense	14,120	16,330	46,581	45,334
Net interest income	17,232	21,993	60,617	64,876
Gain (loss) on sale of residential mortgage loans	6,026	3,154	15,607	11,594
Dividend income	(188)	17	(153)	50
Fee income	2,023	781	1,425	4,767
Total revenues	25,093	25,945	77,496	81,287
OPERATING EXPENSES
Management fees - related party	3,053	3,252	10,189	10,312
Equity compensation - related party	1,766	(225)	4,444	1,561
Rental operating expense	0	0	0	6
Lease operating	1	(33)	5	14
General and administrative	12,341	10,223	33,353	29,641
Depreciation and amortization	505	628	1,650	1,814
Impairment losses	25,297	0	25,297	59
Provision (recovery) for loan and lease losses	7,683	1,034	19,819	43,834
Total operating expenses	50,646	14,879	94,757	87,241
Net interest and other revenues less operating expenses	(25,553)	11,066	(17,261)	(5,954)
OTHER INCOME (EXPENSE)
Equity in earnings of unconsolidated subsidiaries	1,032	334	5,950	1,702
Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	(10,106)	2,457	(7,817)	16,612
Net realized and unrealized gain (loss) on investment securities, trading	(242)	(580)	86	1,773
Unrealized gain (loss) and net interest income on linked transactions, net	0	0	0	235
(Loss) on reissuance/gain on extinguishment of debt	0	(332)	0	(1,403)
(Loss) gain on sale of real estate	31	(19)	28	(19)
Other income (expense)	1,500	0	1,500	0
Total other income (expense)	(7,785)	1,860	(253)	18,900
INCOME (LOSS) BEFORE TAXES	(33,338)	12,926	(17,514)	12,946
Income tax (expense) benefit	(12,283)	1,796	(9,558)	(2,969)
NET INCOME (LOSS)	(45,621)	14,722	(27,072)	9,977
Net (income) loss allocated to preferred shares	(6,015)	(6,115)	(18,077)	(18,322)
Carrying value in excess of consideration paid for preferred shares	0	0	1,500	0
Net (income) loss allocable to non-controlling interest, net of taxes	63	(1,829)	213	(6,486)
NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES	$ (51,573)	$ 6,778	$ (43,436)	$ (14,831)
NET INCOME (LOSS) PER COMMON SHARE – BASIC (in dollars per share)	$ (1.69)	$ 0.21	$ (1.42)	$ (0.45)
NET INCOME (LOSS) PER COMMON SHARE – DILUTED (in dollars per share)	$ (1.69)	$ 0.21	$ (1.42)	$ (0.45)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC (in shares)	30,528,368	32,515,226	30,513,131	32,726,194
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED (in shares)	30,528,368	32,951,217	30,513,131	32,726,194

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (45,621)	$ 14,722	$ (27,072)	$ 9,977
Other comprehensive income (loss):
Reclassification adjustment for realized (gains) losses on available-for-sale securities included in net income	0	(1,805)	(596)	(12,139)
Unrealized gains (losses) on available-for-sale securities, net	6,182	(1,769)	8,382	(345)
Reclassification adjustments associated with unrealized (gains) losses from interest rate hedges included in net income	26	412	(29)	538
Unrealized gains on derivatives, net	1	1,080	118	3,424
Foreign currency translation adjustments	0	(86)	0	343
Total other comprehensive income (loss)	6,209	(2,168)	7,875	(8,179)
Comprehensive income (loss) before allocation to non-controlling interests and preferred shares	(39,412)	12,554	(19,197)	1,798
Unrealized (gains) losses on available-for-sale securities allocable to non-controlling interests	0	1,233	0	2,510
Net (income) loss allocable to non-controlling interests	63	(1,829)	213	(6,486)
Net (income) loss allocated to preferred shares	(6,015)	(6,115)	(18,077)	(18,322)
Carrying value in excess of consideration paid for preferred shares	0	0	1,500	0
Comprehensive income (loss) allocable to common shares	$ (45,364)	$ 5,843	$ (35,561)	$ (20,500)

XML

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands	Total	Parent [Member]	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive (Loss) Income	Retained Earnings	Distributions in Excess of Earnings	Non-Controlling Interests	Preferred Shares - Series A Preferred Stock	Preferred Shares - Series B Preferred Stock	Preferred Shares - Series C Preferred Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance prior to adjustment	$ 826,760	$ 818,864	$ 32	$ 1,228,346	$ (2,923)	$ 0	$ (406,603)	$ 7,896	$ 1	$ 6	$ 5
Deconsolidation of variable interest entities	(23,851)	(14,975)			1,957		(16,932)	(8,876)
Balance at Dec. 31, 2015	$ 802,909	803,889	$ 32	1,228,346	(966)	0	(423,535)	(980)	1	6	5
Balance (in shares) at Dec. 31, 2015	31,562,724		31,562,724
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Proceeds from dividend reinvestment and stock purchase plan (in shares)	9,000		9,423
Proceeds from dividend reinvestment and stock purchase plan	$ 110	110		110
Discount on 8.0% convertible senior notes	19	19		19
Stock based compensation (in shares)			307,070
Stock based compensation	0	0		0
Amortization of stock based compensation	4,444	4,444		4,444
Purchase and retirement of shares (in shares)			(807,218)
Purchase and retirement of common shares	(9,398)	(9,398)	$ (1)	(9,397)
Forfeiture of unvested stock (in shares)			(262)
Net income (loss)	(27,072)	(26,859)				(26,859)		(213)
Preferred dividends	(18,077)	(18,077)				(18,077)
Preferred stock redemption	(3,115)	(3,115)		(4,615)		1,500
Securities available-for-sale, fair value adjustment, net	7,786	7,786			7,786
Designated derivatives, fair value adjustment	89	89			89
Distributions on common stock	$ (39,136)	(39,136)				43,436	(82,572)
Balance (in shares) at Sep. 30, 2016	31,071,737		31,071,737
Balance at Sep. 30, 2016	$ 718,559	$ 719,752	$ 31	$ 1,218,907	$ 6,909	$ 0	$ (506,107)	$ (1,193)	$ 1	$ 6	$ 5
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance prior to adjustment	$ 718,559

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) Entity		Sep. 30, 2015 USD ($)
Cash and cash equivalents	$ 0
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	(27,072)		$ 9,977
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Provision (recovery) for loan and lease losses	19,819		43,834
Depreciation, amortization, and accretion	4,471		14,109
Amortization of stock-based compensation	4,444		1,561
Provision (benefit) for deferred taxes	16,335		0
Sale (origination) of residential mortgage loans held for sale, net	(96,556)		(403)
Capitalization of residential mortgage servicing rights	(13,815)		(12,520)
Sale (purchase) of and principal payments on securities, trading, net	229		(3,120)
Net realized and unrealized loss (gain) on investment securities, trading	(86)		(1,773)
Net realized and unrealized (gain) loss on sales of investment securities available-for-sale and loans	7,817		(16,612)
Loss (gain) on the reissuance (extinguishment) of debt	0		1,403
Loss (gain) on sale of real estate	(28)		19
Settlement of derivative instruments	(6,982)		3,870
Net impairment losses recognized in earnings	25,297		59
Unrealized gain (loss) and net interest income on linked transactions, net	0		(235)
Equity in net (earnings) losses of unconsolidated subsidiaries	(5,950)		(1,702)
Changes in operating assets and liabilities, net of acquisitions	772		(4,317)
Net cash provided by (used in) operating activities	(71,305)		34,150
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in restricted cash	16,816		96,887
Deconsolidation of VIEs	(472)	[1]	0	[1]
Purchase of securities available-for-sale	(6,656)		(28,375)
Principal payments on securities available-for-sale	36,855		59,819
Proceeds from sale of securities available-for-sale	0		60,752
Acquisition of collateralized debt obligation assets	(7,511)		0
Proceeds from sale of Northport TRS, LLC	104,187		0
Return of capital from (investment in) unconsolidated entity	(490)		5,625
Proceeds from sale of real estate held-for-sale	0		47
Purchase and origination of loans	(257,823)		(629,832)
Principal payments received on loans	362,036		294,901
Proceeds from sale of loans	9,316		108,446
Purchase of property and equipment	(28)		(10)
Principal payments received on loans – related parties	0		558
Settlement of derivative instruments	(147)		8,028
Net cash (used in) provided by investing activities	256,083		(23,154)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuances of common stock and dividend reinvestment and stock purchase plan (net of offering costs of $0 and $96)	108		163
Proceeds from issuance of preferred shares (net of offering costs of $0 and $80)	0		3,033
Repurchase of common stock	(9,398)		(15,433)
Repurchase of preferred shares	(3,114)		0
Net proceeds (borrowings) from repurchase agreements	195,514		(157,024)
Proceeds from borrowings:
Securitizations	0		505,862
Convertible senior notes	0		99,000
Senior secured revolving credit facility	33,000		110,500
Reissuance of debt	0		16,597
Payments on borrowings:
Securitizations	(226,570)		(374,778)
Senior secured revolving credit facility	(79,000)		(62,000)
Payment of debt issuance costs	(1,980)		(13,235)
Distributions to non-controlling interest and subordinated note holders	0		(14,568)
Proceeds received from non-controlling interests	0		3,424
Distributions paid on preferred stock	(18,144)		(18,274)
Distributions paid on common stock	(39,398)		(69,433)
Net cash provided by (used in) financing activities	(148,982)		13,834
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	35,796		24,830
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	78,756	[2]	79,905
CASH AND CASH EQUIVALENTS AT END OF PERIOD	114,552	[2]	104,735
SUPPLEMENTAL DISCLOSURE:
Interest expense paid in cash	37,497		33,971
Income taxes paid in cash	$ 4,032		$ 9,518
VIE, Primary Beneficiary
Number of consolidated VIEs | Entity	7

[1] Cash and cash equivalents as of January 1, 2016 decreased by $472,000 due to the adoption of the amendments to the consolidation accounting guidance resulting in the deconsolidation of five variable interest entities (see Note 2).

[2] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from dividend reinvestment and stock purchase plan, offering costs	$ 0	$ 96
Offering costs on stock issuance	$ 0	$ 80

XML

ORGANIZATION AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Resource Capital Corp. and its subsidiaries’ (collectively the "Company") originate, purchase and manage a diversified portfolio of commercial real estate ("CRE") debt investments.  The Company’s investment activities are managed by Resource Capital Manager, Inc. ("Manager") pursuant to a management agreement (the "Management Agreement").  The Manager is a wholly-owned, indirect subsidiary of Resource America, Inc. ("Resource America") (formerly traded on NASDAQ: REXI). On September 8, 2016, Resource America was acquired by C-III Capital Partners LLC ("C-III"), a commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, collateralized debt obligation ("CDO") management, principal investment, investment sales and multifamily property management. As part of the transaction, C-III took over control of the Manager with respect to the Management Agreement and became the beneficial owner of the Company’s common shares owned by Resource America, approximately 2.3% of the Company’s outstanding shares as of September 30, 2016.

On January 1, 2016, the Company adopted the amendments to the consolidation guidance as outlined in Note 2. As a result of its evaluation, the Company determined that it is no longer the primary beneficiary of the following VIEs and, therefore, deconsolidated these entities: Resource Real Estate Funding CDO 2006-1, Ltd. ("RREF CDO 2006-1"), Resource Real Estate Funding CDO 2007-1, Ltd. ("RREF CDO 2007-1"), Apidos Cinco CDO, Ltd. ("Apidos Cinco CDO"), Pelium Capital Partners, L.P., ("Pelium Capital") and RCM Global, LLC ("RCM Global").

On July 1, 2016, the Company underwent an internal tax restructuring in order to reduce the costs associated with ownership of multiple legal entities, simplify its overall legal entity structure, ease deployment of cash throughout the business for operations and opportunities and consolidate operations into one centralized entity or group of entities. As a result of this tax restructuring, several of the Company’s directly owned subsidiaries converted from corporations to single member LLCs. Also, the following directly owned subsidiaries of the Company merged into RCC Residential Portfolio TRS, Inc. ("RCC Resi TRS") and were dissolved upon the restructuring: Long Term Care Conversion, Inc. ("LTCC") and Resource TRS II, Inc. ("Resource TRS II"). On October 1, 2016, RCC Residential, Inc. ("RCC Residential") merged into RCC Resi TRS.

The following subsidiaries are consolidated in the Company’s financial statements:

• RCC Real Estate, Inc. ("RCC Real Estate") holds real estate investments, including commercial real estate loans, commercial real estate-related securities and direct investments in real estate.  RCC Real Estate owns 100% of the equity of the following VIEs:

◦ RREF CDO 2006-1, a Cayman Islands limited liability company and qualified real estate investment trust ("REIT") subsidiary ("QRS").  RREF CDO 2006-1 was established to complete a collateralized debt obligation ("CDO") issuance secured by a portfolio of CRE loans and commercial mortgage-backed securities ("CMBS"). This entity was deconsolidated as of January 1, 2016 and the retained investment is accounted for as an investment security, available-for-sale (see Note 2) in the Company's consolidated financial statements. On April 25, 2016, RREF CDO 2006-1 was liquidated and, in exchange for the Company's interests in RREF CDO 2006-1, the remaining assets of the CDO were distributed to the Company, comprised of investment securities available-for-sale and loans held for investment, which were recorded at fair value.

◦ RREF CDO 2007-1, a Cayman Islands limited liability company and QRS.  RREF CDO 2007-1 was established to complete a CDO issuance secured by a portfolio of CRE loans and CMBS. This entity was deconsolidated as of January 1, 2016 and the retained investment is now accounted for as an investment security, available-for-sale (see Note 2) in the Company's consolidated financial statements.

◦ Resource Capital Corp. CRE Notes 2013, Ltd. ("RCC CRE Notes 2013"), a Cayman Islands limited liability company and QRS, was established to complete a CRE securitization issuance secured by a portfolio of CRE loans.

◦ Resource Capital Corp. 2014-CRE2, Ltd. ("RCC 2014-CRE2"), a Cayman Islands limited liability company and QRS, was established to complete a CRE securitization issuance secured by a portfolio of CRE loans.

◦ Resource Capital Corp. 2015-CRE3, Ltd. ("RCC 2015-CRE3"), a Cayman Islands limited liability company and QRS, was established to complete a CRE securitization issuance secured by a portfolio of CRE loans.

◦ Resource Capital Corp. 2015-CRE4, Ltd. ("RCC 2015-CRE4"), a Cayman Islands limited liability company and QRS, was established to complete a CRE securitization issuance secured by a portfolio of CRE loans.

• RCC Commercial, Inc. ("RCC Commercial") holds a 29.6% investment in NEW NP, LLC ("NEW NP, LLC"), a Delaware limited liability company, which holds bank loan investments and the Company's self-originated middle market loans, and owns 100% of the equity of the following VIE:

◦ Apidos CDO III, Ltd. ("Apidos CDO III"), a Cayman Islands limited liability company and taxable REIT subsidiary ("TRS"), was established to complete a CDO issuance secured by a portfolio of bank loans and asset-backed securities ("ABS"). On March 31, 2015, the Company issued a notice of redemption to Apidos CDO III's trustee to call the CDO. In June 2015, the Company liquidated Apidos CDO III and, as a result, all of the assets were sold.

• RCC Commercial II, Inc. ("Commercial II") holds structured notes, available-for-sale securities and investments in the subordinated notes of foreign, syndicated bank loan collateralized loan obligation ("CLO") vehicles.  Commercial II owns 100%, 68.3%, and 88.6% respectively, of the equity of the following VIEs:

◦ Apidos Cinco CDO, a Cayman Islands limited liability company and TRS, was established to complete a CDO issuance secured by a portfolio of bank loans, ABS and corporate bonds. This entity was deconsolidated as of January 1, 2016 and the retained investment is now accounted for as an investment security, available-for-sale (see Note 2). On September 28, 2016, Apidos Cinco CDO’s trustee issued a notice to call the notes issued by the CDO.

◦ Whitney CLO I, Ltd. ("Whitney CLO I"), a Cayman Islands limited liability company and TRS. In September 2013, the Company liquidated Whitney CLO I and, as a result, all of the assets were sold.

◦ Moselle CLO S.A. ("Moselle CLO"), incorporated in Luxembourg, is a CLO issuer whose assets consisted of European senior secured loans, U.S. senior secured loans, U.S. senior unsecured loans, U.S. second lien loans, European mezzanine loans, and a limited amount of synthetic securities and other eligible debt obligations. In December 2014, the Company liquidated Moselle CLO and, as a result, substantially all of the assets were sold.

• RCC Commercial III, Inc. ("Commercial III") holds bank loan investments.  Commercial III owns 90% of the equity of the following VIE:

◦ Apidos CDO I, Ltd. ("Apidos CDO I"), a Cayman Islands limited liability company and TRS was established to complete a CDO issuance secured by a portfolio of bank loans and ABS. In October 2014, the Company liquidated Apidos CLO I, and as a result, substantially all of the assets were sold.

• RSO EquityCo, LLC owned 10% of the equity of Apidos CDO I and 10% of the equity of Apidos CLO VIII, Ltd ("Apidos CLO VIII"), a Cayman Islands limited liability company and TRS.

• RCC Residential, a TRS directly owned by the Company, is a Delaware corporation which owns 100% of the following entities:

◦ Primary Capital Mortgage, LLC ("PCM"), (formerly known as Primary Capital Advisors, LLC), a limited liability company that originates and services residential mortgage loans.

◦ RCM Global Manager, LLC ("RCM Global Manager"), a Delaware limited liability company, owns 28.6% of the following entity:

▪ RCM Global, a Delaware limited liability company, holds a portfolio of investment securities, available-for-sale.This entity was deconsolidated as of January 1, 2016 and the retained investment is now accounted for as an equity method investment (see Note 2).

▪ RCC Residential Portfolio, Inc. ("RCC Resi Portfolio"), a Delaware corporation directly owned by the Company, invests in residential mortgage-backed securities ("RMBS").

▪ RCC Resi TRS, a TRS directly owned by the Company, is a Delaware corporation which was formed to hold strategic residential mortgage positions which could not be held by RCC Resi Portfolio. RCC Resi TRS also owns 100% of the equity, unless otherwise stated, in the following:

◦ RCC Residential Depositor, LLC ("RCC Resi Depositor"), a Delaware limited liability company, owns 100% of the following entity:

▪ RCC Residential Acquisition, LLC ("RCC Resi Acquisition"), a Delaware limited liability company, which was formed to purchase residential mortgage loans from PCM and transfer the assets to RCC Opportunities Trust ("RCC Opp Trust").

* RCC Opp Trust, a Delaware statutory trust, which was formed to hold a portfolio of residential mortgage loans, available-for-sale.

◦ Resource TRS III, LLC, formerly Resource TRS III, Inc. ("Resource TRS III"), a TRS directly owned by the Company, held the Company’s interests in a bank loan CDO originated by the Company.  Resource TRS III previously owned 33% of the equity of Apidos CLO VIII, which was liquidated in October 2013.

◦ Resource TRS IV, LLC, formerly Resource TRS IV, Inc. ("Resource TRS IV"), a TRS directly owned by the Company, held the Company's equity investment in hotel condominium units acquired in conjunction with a loan foreclosure. The hotel condominium units were sold in April 2014.

◦ Resource TRS V, LLC, formerly Resource TRS V, Inc., ("Resource TRS V"), a TRS directly owned by the Company, held the Company's equity investment in a held for sale condominium complex. All of the condominium units were sold as of December 31, 2013.

◦ Long Term Care Conversion Funding ("LTCC Funding"), a New York limited liability company, which provides funding through a financing facility to fund the acquisition of life settlement contracts.

◦ Life Care Funding, LLC ("LCF"), a New York limited liability company, is a joint venture between RCC Resi TRS, which owns a 70.9% equity interest, and Life Care Funding Group Partners. LCF was established for the purpose of acquiring life settlement contracts.

◦ ZWH4, LLC ("ZAIS"), a Delaware limited liability company, which owned a beneficial interest in the warehouse credit facility of ZAIS CLO 4, Limited, is a Cayman Islands exempted limited liability company, in equity form, that is used to finance the purchase of syndicated bank loans. The warehouse credit facility closed on May 5, 2016, at which time, Resource TRS III purchased a beneficial interest in ZAIS CLO 4.

◦ Resource TRS, LLC, a Delaware limited liability company, which holds a 25.8% investment in NEW NP, LLC.

◦ RCC TRS, LLC, formerly Resource TRS, Inc. ("Resource TRS"), holds the Company’s equity investment in a leasing company and holds all of its investment securities, trading (through both direct and indirect investments in such securities). Resource TRS also owns equity in the following:

▪ NEW NP, LLC holds bank loan investments and the Company's self-originated middle market loans. Resource TRS owns 44.6% of the equity in NEW NP, LLC as of September 30, 2016. An additional 29.6% of the equity is owned by RCC Commercial. NEW NP, LLC owned 100% of Northport TRS, LLC, a Delaware limited liability company, which held middle market loans. NEW NP, LLC sold its interest in Northport TRS, LLC on August 4, 2016.

▪ Pelium Capital, a Delaware limited partnership, which holds investment securities, trading. Resource TRS owns 80.2% of the equity in Pelium Capital as of September 30, 2016. This entity was deconsolidated as of January 1, 2016 and the retained investment is now accounted for as an equity method investment (see Note 2).

◦ Resource Capital Asset Management ("RCAM"), a domestic limited liability company, which is entitled to collect senior, subordinated, and incentive fees related to one remaining CLO issuer to which it provides management services through CVC Credit Partners, L.P., formerly Apidos Capital Management ("ACM"), a subsidiary of CVC Capital Partners SICAV-FIS, S.A., a private equity firm ("CVC").  Resource America, Inc. owns a 24% interest in CVC Credit Partners, L.P., ("CVC Credit Partners").

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reverse Stock Split and Amended and Restated Certificate of Incorporation

Effective August 31, 2015, the Company completed a one-for-four reverse stock split of its outstanding common stock. The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented. In addition, the Company adopted an Amended and Restated Certificate of Incorporation, which provides that its authorized capital stock consists of 125,000,000 shares of common stock, $0.001 par value per share, and 100,000,000 shares of preferred stock, $0.001 par value per share.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the accounting policies set forth in Note 2 included in our annual report on Form 10-K for the year ended December 31, 2015. The consolidated financial statements include the accounts of the Company. All inter-company transactions and balances have been eliminated.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of three months or less at the time of purchase. At September 30, 2016 and December 31, 2015, approximately $111.2 million and $74.3 million of the reported cash balances exceeded the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution, subjecting the Company to risk related to the uninsured balance. All of the Company's cash deposits are held at large, established financial institutions. 

Income Taxes

Due to changes in management’s focus regarding the non-CRE businesses, the Company determined that it no longer expects to have sufficient forecasted taxable income to completely realize the tax benefits of the gross deferred tax asset of $56.5 million (tax effected $21.9 million) as of September 30, 2016. The Company believes it will be able to utilize up to $15.4 million of the gross deferred tax asset prior to its expiration. Therefore, a gross valuation allowance of $41.1 million (tax effected expense of $16.3 million) has been recorded against the deferred tax asset as of September 30, 2016. Management will continue to assess its estimate of the amount of deferred tax asset that the Company expects to utilize. The net income tax expense recorded during the quarter ended September 30, 2016 was $12.3 million which consists of $4.0 million of tax benefits attributable to operating loss incurred during the quarter and a $16.3 million valuation allowance.

Recent Accounting Standards

In August 2016, the FASB issued new guidance to reduce the diversity in practice around the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The guidance addresses the following eight specific cash flow issues : debt prepayments or extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); settlement of zero-coupon debt instruments or other debt instruments with insignificant coupon rates; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within that reporting period. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance.

In June 2016, the FASB issued guidance which will change how credit losses for most financial assets and certain other instruments that are measured at fair value through net income are determined. The new guidance will replace the current incurred loss approach with an expected loss model for instruments measured at amortized cost. For available-for-sale debt securities, the guidance requires recording allowances rather than reducing the carrying amount, as it is currently under the other-than-temporary impairment model. It also simplifies the accounting model for credit-impaired debt securities and loans. This guidance is effective for annual reporting periods beginning after December 15, 2019, and interim periods within that reporting period. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within that reporting period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance.

In March 2016, the FASB issued guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance.

In February 2016, the FASB issued guidance requiring lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting will remain largely unchanged. The guidance will also require new qualitative and quantitative disclosures to help financial statement users better understand the timing, amount and uncertainty of cash flows arising from leases. This guidance will be effective for reporting periods beginning on or after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this guidance and its impact on our consolidated financial statements.

In January 2016, the FASB issued guidance to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments in order to provide users of financial statements with more decision-useful information. The guidance requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.  It is effective for annual reporting periods, and the interim periods within those periods, beginning after December 15, 2017 and early adoption is permitted for certain provisions. The Company is currently evaluating the effect of adoption.

In September 2015, the FASB issued guidance that simplifies the accounting for adjustments made to provisional amounts recognized in a business combination, which are currently recognized on a retrospective basis. Under the new requirements, adjustments to provisional amounts will be recognized in the reporting period in which the adjustments are determined. The effects of changes in depreciation, amortization, or other income arising from changes to the provisional amounts, if any, are included in earnings of the reporting period in which the adjustments to the provisional amounts are determined. An entity is also required to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.  It is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued guidance that simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. It is effective for annual reporting periods beginning after December 15, 2015. The Company has early adopted the provisions of this guidance. Note 12, Borrowings, reflects the presentation of debt issuance costs as prescribed by this accounting standards update. Adoption did not have a material impact on the Company's consolidated financial statements.

In February 2015, the FASB issued guidance that requires an entity to evaluate whether it should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) modify the evaluation of whether limited partnerships and similar legal entities are VIEs; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related-party relationships; and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015.

On January 1, 2016, the Company adopted the above guidance as required.  As a result of its re-evaluation, the Company determined it was no longer the primary beneficiary of the following VIEs and, therefore, they were deconsolidated: RREF CDO 2006-1, RREF CDO 2007-1, Apidos Cinco CDO, Pelium Capital, and RCM Global.  As a result of these deconsolidations, the Company no longer reflects the underlying collateral (loans and securities) of those VIEs in its consolidated financial statements. Instead, the Company prospectively reflects in its consolidated balance sheet, its direct investments (the "retained investments") in the issued and outstanding securities of those VIEs. The Company'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 Company's retained investments in Pelium Capital and RCM Global are accounted for as equity method investments. The Company 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.  The reduction to retained earnings represents the effect of marking the investments to market value as of the date of the adoption.

The following table summarizes the net impact of the deconsolidation of the five VIEs upon adoption on January 1, 2016 (in thousands) net of eliminations:

	Total Deconsolidated VIEs			Retained Interest as of 1/1/2016		Net Impact on Deconsolidation
ASSETS:
Cash and cash equivalents	$	472		$	—	$	472
Restricted cash	17,076			—		17,076
Loans, pledged as collateral and net of allowances (1)(2)(3)	364,589			—		364,589
Loans held for sale	1,322			—		1,322
Investment securities available-for-sale, at fair value	68,997			166,769		(97,772		)
Investment securities, trading	21,851			—		21,851
Investments in deconsolidated entities	17,250			23,175		(5,925		)
Interest receivable	4,299			—		4,299
Principal paydown receivable	17,800			—		17,800
Prepaid expenses	256			—		256
Other assets	972			—		972
Total assets	$	514,884		$	189,944	$	324,940
LIABILITIES:
Borrowings	$	297,191		$	—	$	297,191
Accrued interest expense	297			—		297
Derivative liabilities, at fair value	3,346			—		3,346
Accounts payable and other liabilities	255			—		255
Total liabilities	301,089			—		301,089
Retained earnings	206,876			189,944		16,932
Non-controlling interests	8,876			—		8,876
Accumulated other comprehensive loss	(1,957		)	—		(1,957		)
Total equity	213,795			189,944		23,851
Total liabilities and equity	$	514,884		$	189,944	$	324,940

(1) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, $40.3 million of specific reserves and $142,000 of general reserves on CRE loans were deconsolidated as of January 1, 2016.

(2) As part of the deconsolidation of Apidos Cinco CDO, $1.3 million of specific reserves on the bank loans were deconsolidated as of January 1, 2016.

(3) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, the Company deconsolidated four loans representing the senior participations in commercial real estate loans totaling $91.3 million that were previously disclosed as both impaired loans and troubled debt restructurings as of December 31, 2015.

In November 2014, the FASB issued guidance to eliminate the use of different methods in practice and thereby reduce existing diversity under GAAP in the accounting for hybrid financial instruments issued in the form of shares. An entity that issues or invests in a hybrid financial instrument is required to separate an embedded derivative feature from the host contract (for example, an underlying share) and account for the feature as a derivative according to Accounting Standards Codification ("ASC") Subtopic 815-10 on derivatives and hedging if certain criteria are met. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

In August 2014, the FASB issued guidance that clarifies the disclosures management must make in its interim and annual financial statement footnotes when management has determined that conditions exist that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued (or within one year after the date the financial statements are available to be issued when applicable). In accordance with this guidance, management’s assessment is required to be made each reporting period and should be based on relevant conditions and events that are known and reasonably knowable at the date the financial statements are issued. In all cases, to the extent that substantial doubt about the entity’s ability to continue as a going concern is determined to be probable, management must disclose the principal conditions or events that gave rise to the substantial doubt about the entity’s ability to continue as a going concern, management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, and management’s plans that either alleviate or are intended to mitigate the conditions or events that gave rise to the substantial doubt about the entity’s ability to continue as a going concern. Additionally, to the extent substantial doubt about the entity’s ability to continue as a going concern is not alleviated by management’s plans, management must indicate in the footnotes that there is substantial doubt about the entity’s ability to continue as a going concern. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effect of adoption.

In August 2014, the FASB issued guidance that provides for the election of a measurement alternative when a reporting entity determines that it is the primary beneficiary of a collateralized financing entity and, hence, is required to consolidate that collateralized financing entity. The measurement alternative allows a qualifying consolidated collateralized financing entity to use the more observable of the fair value of the financial assets or the fair value of the financial liabilities adjusted by the carrying amount of non-financial assets and the fair value of any beneficial interests retained by the reporting entity (including those beneficial interests that represent compensation for services). Alternatively, if the measurement alternative is not elected for a qualifying consolidated collateralized financing entity, this guidance requires that the financial assets and financial liabilities be measured in accordance with ASC Topic 820, and that any difference in the fair value of the financial assets and the fair value of the financial liabilities be reflected in earnings and attributed to the reporting entity in the consolidated statement of operations. This guidance was effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

Reclassifications

Certain reclassifications have been made to the 2015 consolidated financial statements to conform to the 2016 presentation.

XML

VARIABLE INTEREST ENTITIES

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

NOTE 3 - VARIABLE INTEREST ENTITIES

The Company has evaluated its securities, loans, investments in unconsolidated entities, liabilities to subsidiary trusts issuing preferred securities (consisting of unsecured junior subordinated notes), securitizations, guarantees and other financial contracts in order to determine if they are variable interests in VIEs. The Company regularly monitors these legal interests and contracts and, to the extent it has determined that it has a variable interest, analyzes the related entity for potential consolidation. A VIE is required to be consolidated by its primary beneficiary, which, generally, is the entity that has the power to direct the activities that are most significant to the VIE and the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE. The Company continuously analyzes entities in which it holds variable interests, including when there is a reconsideration event, to determine whether such entities are VIEs and whether such potential VIEs should be consolidated or deconsolidated. This analysis requires considerable judgment.

Consolidated VIEs (the Company is the primary beneficiary)

Based on management’s analysis, the Company is the primary beneficiary of seven VIEs at September 30, 2016: Apidos CDO I, Apidos CDO III, Whitney CLO I, RCC CRE Notes 2013, RCC 2014-CRE2, RCC 2015-CRE3 and RCC 2015-CRE4 (collectively the "Consolidated VIEs"). The Consolidated VIEs were formed on behalf of the Company to invest in real estate-related securities, CMBS, property available-for-sale, bank loans, corporate bonds and asset-backed securities and were financed by the issuance of debt securities. The Manager manages the commercial real estate-related entities on behalf of the Company, and CVC Credit Partners manages the commercial finance-related entities on behalf of the Company. By financing these assets with long-term borrowings through the issuance of bonds, the Company seeks to generate attractive risk-adjusted equity returns and to match the term of its assets and liabilities. The primary beneficiary determination for each of these VIEs was made at each VIE’s inception and is continually assessed. All of the Company's VIEs were reevaluated under the revised consolidation model effective for the Company on January 1, 2016 (see Note 2).

As of December 31, 2015, the Company was the primary beneficiary of thirteen VIEs: Apidos CDO I, Apidos CDO III, Apidos Cinco CDO, Apidos CLO VIII, RREF CDO 2006-1, RREF CDO 2007-1, Whitney CLO I, RCC CRE Notes 2013, RCC 2014-CRE2, RCC 2015-CRE3, RCC 2015-CRE4, Moselle CLO and RCM Global (collectively, the "Consolidated VIEs at December 31, 2015"). In performing the primary beneficiary analysis for the Consolidated VIEs at December 31, 2015, it was determined that the parties that have the power to direct the activities that are most significant to each of these VIEs and that had the right to receive benefits or the obligation to absorb losses that could potentially be significant to these VIEs, were a related-party group. It was then determined that the Company was the party within that group that was more closely associated with each such VIE considering the design of the VIE, the principal-agency relationship between the Company and other members of the related-party group, and the relationship and significance of the activities of the VIE to the Company compared to the other members of the related-party group. Apidos CDO I, Apidos CDO III, Apidos Cinco CDO, Apidos CLO VIII, RREF CDO 2006-1, RREF CDO 2007-1, RCC CRE Notes 2013, RCC 2014-CRE2, RCC 2015-CRE3 and RCC 2015-CRE4 were formed on behalf of the Company to invest in real estate-related securities, CMBS, property available-for-sale, bank loans, corporate bonds and asset-backed securities and were financed by the issuance of debt securities. The Manager manages the commercial real estate-related entities on behalf of the Company, and CVC Credit Partners manages the commercial finance-related entities on behalf of the Company. The primary beneficiary determination for each of these VIEs was made at each VIE’s inception and is continually assessed.

Moselle CLO was a European securitization in which the Company purchased a $30.4 million interest in the form of subordinate notes representing 100% of the Class 1 Subordinated Notes and 67.9% of the Class 2 Subordinated Notes in February 2014. The CLO was managed by an independent third-party, and such collateral management activities were determined to be the activities that most significantly impacted the economic performance of the CLO. Though neither the Company nor one of its related parties managed the CLO, due to certain unilateral kick-out rights within the collateral management agreement it was determined that the Company had the power to direct the activities that most significantly impacted the economic performance of Moselle CLO. Having both the power to direct the activities that most significantly impact Moselle CLO and a financial interest that was expected to absorb both positive and negative variability in the CLO that could potentially be significant, the Company was determined to be the primary beneficiary of Moselle CLO and, therefore, consolidated the CLO. During the fourth quarter of 2014, the CLO began the liquidation process and all assets were subsequently sold. The Company's interest in the Moselle CLO Subordinated Notes was fully redeemed in March 2016.

Whitney CLO I was a securitization in which the Company acquired rights to manage the collateral assets held by the entity in February 2011. For a discussion on the primary beneficiary analysis for Whitney, see “— Unconsolidated VIEs – Resource Capital Asset Management,” below.

For a discussion of the Company’s consolidated securitizations, see Note 1, and for a discussion of the debt issued through the securitizations, see Note 12.

For consolidated CLOs in which the Company does not own 100% of the subordinated notes, the Company imputes an interest rate using expected cash flows over the life of the CLO and records the third party's share of the cash flows as interest expense on the consolidated statements of operations.

The Company has exposure to losses on its securitizations to the extent of its subordinated debt and preferred equity interests in them. The Company is entitled to receive payments of principal and interest on the debt securities it holds and, to the extent revenues exceed debt service requirements and other expenses of the securitizations, distributions with respect to its preferred equity interests. As a result of consolidation, debt and equity interests the Company holds in these securitizations have been eliminated, and the Company’s consolidated balance sheets reflects both the assets held and debt issued by the securitizations to third parties and any accrued expense to third parties. The Company's operating results and cash flows include the gross amounts related to the securitizations' assets and liabilities as opposed to the Company's net economic interests in the securitizations. Assets and liabilities related to the securitizations are disclosed, in the aggregate, on the Company's consolidated balance sheets.

The creditors of the Company’s seven consolidated VIEs have no recourse to the general credit of the Company. During the three and nine months ended September 30, 2016, the Company provided no financial support to any of its VIEs nor does it have any requirement to do so, although it may choose to do so in the future to maximize future cash flows on such investments by the Company. There are no explicit arrangements that obligate the Company to provide financial support to any of its consolidated VIEs.

The following table shows the classification and carrying value of assets and liabilities of the Company's consolidated VIEs as of September 30, 2016 (in thousands):

	Apidos I		Apidos III		Whitney CLO I		RCC CRE Notes 2013		RCC 2014-CRE2		RCC 2015-CRE3		RCC 2015-CRE4		Total
ASSETS
Restricted cash (1)	$	280	$	153	$	153	$	—	$	—	$	2,000	$	2,887	$	5,473
Loans held for investment	—		—		—		26,605		255,744		258,881		260,512		801,742
Interest receivable	—		—		—		292		1,003		1,117		977		3,389
Prepaid assets	—		—		—		6		5		5		5		21
Principal paydown receivable	—		—		—		36,600		—		8,000		—		44,600
Other assets	—		—		—		208		—		45		—		253
Total assets (2)	$	280	$	153	$	153	$	63,711	$	256,752	$	270,048	$	264,381	$	855,478
LIABILITIES
Borrowings	$	—	$	—	$	—	$	16,179	$	135,857	$	203,482	$	173,453	$	528,971
Accrued interest expense	—		—		—		25		107		209		159		500
Accounts payable and other liabilities	—		—		—		33		10		53		51		147
Total liabilities	$	—	$	—	$	—	$	16,237	$	135,974	$	203,744	$	173,663	$	529,618

(1)    Includes $2.9 million designated to fund future commitments on specific commercial real estate loans in certain of the securitizations.

(2)    Assets of each of the consolidated VIEs may only be used to settle the obligations of each respective VIE.

Unconsolidated VIEs (the Company is not the primary beneficiary, but has a variable interest)

Based on management’s analysis, the Company is not the primary beneficiary of the VIEs discussed below since it does not have both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. Accordingly, the following VIEs are not consolidated in the Company’s financial statements as of September 30, 2016. The Company’s maximum exposure to risk for each of these unconsolidated VIEs is set forth in the “Maximum Exposure to Loss” column in the table below.

RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO

RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO were formed on behalf of the Company to invest in real estate-related securities, CMBS, property available-for-sale, bank loans, corporate bonds and asset-backed securities and were financed by the issuance of debt securities. The Manager manages the commercial real estate-related entities on behalf of the Company, and CVC Credit Partners manages the commercial finance-related entities on behalf of the Company. By financing these assets with long-term borrowings through the issuance of bonds, the Company seeks to generate attractive risk-adjusted equity returns and to match the term of its assets and liabilities. The primary beneficiary determination for each of these VIEs was made at each VIE’s inception and is continually assessed. On January 1, 2016, the Company adopted the amendments to the consolidation guidance as outlined in Note 2. As a result of its evaluation, the Company determined that it was no longer the primary beneficiary of these VIEs as its investments in these vehicles do not provide the Company with a controlling financial interest. As a results of its evaluation, these investments were deconsolidated. At deconsolidation, the Company recorded its investments in RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO at fair value and accounts for these investments as investment securities available-for-sale in its consolidated financial statements. On April 25, 2016, the Company called and liquidated its investment in RREF CDO 2006-1 and, in exchange for the Company's interest in RREF CDO 2006-1, the Company distributed the remaining assets of $65.6 million at fair value after paying off the CDO debt owed to third parties of $7.5 million. The Company recognized a gain of approximately $846,000 as a result of this transaction. On September 28, 2016, Apidos Cinco CDO’s trustee issued a notice to call the CDO.

RCM Global, LLC

On July 9, 2014, RCC Residential, together with Resource America and certain Resource America employees, acquired through RCM Global a portfolio of securities from JP Morgan for $23.5 million.  The portfolio is managed by Resource America. RCC Residential contributed $15.0 million for a 63.8% membership interest. Each of the members of RCM Global is allocated revenues and expenses of RCM Global in accordance with his or her membership interest. RCM Global was determined to be a VIE based on the equity holders' inability to direct the activities that are most significant to the entity. On January 1, 2016, the Company adopted the amendments to the consolidation guidance as outlined in Note 2. Upon adoption, the Company reevaluated its variable interest in RCM Global and determined it would not be the primary beneficiary of RCM Global, as its investment in the limited liability company does not provide the Company with a controlling financial interest. As a result of its evaluation, the Company deconsolidated its investment in RCM Global. As of January 1, 2016, the Company accounted for its investment in RCM Global as an investment in an unconsolidated entity in its consolidated financial statements. As of September 30, 2016, the Company holds a 28.6% interest in RCM Global.

Pelium Capital

In September 2014, the Company contributed $17.5 million to Pelium Capital for an initial ownership interest of 80.4%. Pelium Capital is a specialized credit opportunity fund managed by Resource America. The Company funded its final commitment of $2.5 million, as of February 1, 2015. The Company will receive 10% of the carried interest in the partnership for the first five years which can increase its interest to 20% if the Company's capital contributions aggregate $40.0 million. Resource America contributed cash of $2.8 million to the formation of Pelium Capital. At December 31, 2015, Pelium Capital was accounted for as a consolidated voting interest subsidiary. On January 1, 2016, the Company adopted the amendments to the consolidation guidance as outlined in Note 2. Upon adoption, the Company reevaluated its interest in Pelium Capital and determined that although it now possessed a variable interest in Pelium Capital, it would not be the primary beneficiary of Pelium Capital, as its investment in the limited liability company does not provide the Company with a controlling financial interest. As a result of its reevaluation, the Company deconsolidated its investment in Pelium Capital on January 1, 2016, and accounted for its investment in Pelium Capital as an investment in an unconsolidated entity in its consolidated financial statements. As of September 30, 2016, the Company holds an 80.2% interest in Pelium Capital.

Pearlmark Mezzanine Realty Partners IV, L.P.

On June 24, 2015, the Company committed up to $50.0 million in Pearlmark Mezzanine Realty Partners IV, L.P. ("Pearlmark Mezz"), a Delaware limited partnership created to acquire and manage financial interests in commercial real estate property. The contractual fund manager of the fund is Pearlmark Real Estate LLC ("Pearlmark"), a Delaware limited liability company that is 50% owned by Resource America. The Company determined it possessed a variable interest Pearlmark Mezz, however, it would not be the primary beneficiary of Pearlmark Mezz, as its investment in the limited liability company does not provide the Company with a controlling financial interest. The Company will pay Pearlmark Mezz management fees of 1.0% on the unfunded committed capital and 1.5% on the invested capital. The Company is entitled to a management fee rebate of 25% for the first year of the fund. As of September 30, 2016, the Company has an investment balance of $16.8 million and a 47.7% ownership interest in the fund.

LEAF Commercial Capital, Inc.

On November 16, 2011, the Company together with LEAF Financial, Inc. ("LEAF Financial"), a subsidiary of Resource America, and LEAF Commercial Capital, Inc. (“LCC”), another subsidiary of Resource America, entered into a stock purchase agreement and related agreements (collectively the “SPA”) with Eos Partners, L.P., a private investment firm, and its affiliates (“Eos”). In exchange for its prior interests in its lease related investments, the Company received 31,341 shares of Series A Preferred Stock (the "Series A Preferred Stock"), 4,872 shares of newly issued 8% Series B Redeemable Preferred Stock (the "Series B Preferred Stock") and 2,364 shares of newly issued Series D Redeemable Preferred Stock (the "Series D Preferred Stock"), collectively representing, on a fully-diluted basis, assuming conversion, a 26.7% interest in LCC. At the time of investment, the Company’s investment in LCC was valued at $36.3 million based on a third-party valuation.  During 2013, the Company entered into a third stock purchase agreement with LCC to purchase 3,682 shares of newly issued Series A-1 Preferred Stock (the "Series A-1 Preferred Stock") for $3.7 million and 4,445 shares of newly issued Series E Preferred Stock (the "Series E Preferred Stock") for $4.4 million. The Series E Preferred Stock expired and the Company was issued additional Series A-1 Preferred Stock in exchange for its investment in the Series E Preferred Stock. The Company's fully-diluted interest in LCC, assuming conversion, was 29.0% at September 30, 2016. The Company’s investment in LCC was recorded at $44.8 million and $42.0 million as of September 30, 2016 and December 31, 2015, respectively. The Company determined that it is not the primary beneficiary of LCC because it does not participate in any management or portfolio decisions, holds only two of six board positions, and only controls 29.0% of the voting rights in the entity. Furthermore, Eos holds consent rights with respect to significant LCC actions, including the incurrence of indebtedness, consummation of a sale of the entity, liquidation or initiating a public offering (see Note 17).

Unsecured Junior Subordinated Debentures

The Company has a 100% interest in the common shares of Resource Capital Trust I (“RCT I”) and RCC Trust II (“RCT II”), valued at $1.5 million in the aggregate (or 3% of each trust). RCT I and RCT II were formed for the purposes of providing debt financing to the Company, as described below. The Company completed a qualitative analysis to determine whether or not it is the primary beneficiary of each of the trusts and determined that it was not the primary beneficiary of either trust because it does not have the power to direct the activities most significant to the trusts, which include the collection of principal and interest and protection of collateral through servicing rights. Accordingly, neither trust is consolidated into the Company’s consolidated financial statements.

The Company records its investments in RCT I and RCT II’s common shares as investments in unconsolidated trusts using the cost method and records dividend income when declared by RCT I and RCT II. The trusts each hold subordinated debentures for which the Company is the obligor in the amount of $25.8 million for RCT I and $25.8 million for RCT II. The debentures were funded by the issuance of trust preferred securities of RCT I and RCT II. The Company will continuously reassess whether it should be deemed to be the primary beneficiary of the trusts.

Resource Capital Asset Management CLOs

In February 2011, the Company purchased a company that managed bank loan assets through five CLOs. As a result, the Company became entitled to collect senior, subordinated and incentive management fees from these CLOs. The purchase price of $22.5 million resulted in an intangible asset that was allocated to each of the five CLOs and is amortized over the expected life of each CLO. The unamortized balance of the intangible asset was $512,000 and $5.3 million at September 30, 2016 and December 31, 2015, respectively. The Company recognized fee income of $553,000 and $1.5 million for the three and nine months ended September 30, 2016, respectively. The Company recognized fee income of $791,000 and $2.7 million for the three and nine months ended September 30, 2015, respectively. With respect to four of these CLOs, the Company determined that it does not hold a controlling financial interest and, therefore, is not the primary beneficiary. One of the CLOs was liquidated in February 2013. In January 2016, a second RCAM-managed CLO was called and $2.4 million of impairment, on a pre-tax basis, was recorded in depreciation and amortization on the Company's consolidated statements of operations on the related intangible asset, as of December 31, 2015. In September 2016, the third RCAM-managed CLO was called and $1.5 million of impairment, on a pre-tax basis, was recorded in impairment losses on the Company's consolidated statements of operations on the related intangible asset, during the three months ended September, 30 2016. In September 2016, the Company recorded impairment on the one remaining CLO of $2.2 million, on a pre-tax basis, on the related intangible asset on which the Company anticipates redemption in early 2017.

With respect to the fifth CLO, Whitney CLO I, in October 2012, the Company purchased 66.6% of its preferred equity, which resulted in consolidation. Based upon that purchase, the Company determined that it had an obligation to absorb losses and/or the right to receive benefits that could potentially be significant to Whitney CLO I and that a related party had the power to direct the activities that are most significant to the VIE. As a result, together with the related party, the Company had both the power to direct and the right to receive benefits and the obligation to absorb losses. It was then determined that, between the Company and the related party, the Company was the party within that group that was more closely associated with Whitney CLO I because of its preferred equity interest in Whitney CLO I. The Company, therefore, consolidated Whitney CLO I. In May 2013, the Company purchased additional equity in this CLO which increased its ownership of the outstanding preferred equity to 68.3%. In September 2013, the Company liquidated Whitney CLO I, and, as a result, all of the assets were sold.

Investment in ZAIS

In February 2015, the Company made an investment in ZAIS CLO 4 Limited, an offshore financing vehicle created to acquire and warehouse syndicated bank loans, through its wholly-owned, indirect subsidiary ZAIS and through its unconsolidated subsidiary Pelium Capital together with a Resource America employee. The Company, through ZAIS and Pelium Capital, committed to invest $10.0 million and $3.0 million, respectively, during the vehicle's warehousing period. The warehouse credit facility closed on May 5, 2016, at which time, Resource TRS III purchased a beneficial interest in ZAIS CLO 4. The vehicle is managed by ZAIS Leveraged Loan Manager 4, LLC (the “Collateral Manager”), an entity unrelated to the Company or to Pelium Capital, and such collateral management activities were determined to be the activities that most significantly impacted the economic performance of the entity. The Collateral Manager can be replaced either for cause by the entity’s administrative agent if there is an event of default or by a unanimous vote of the entity’s equity investors, excluding any preference shares held by the Collateral Manager or its affiliates. Although the Company has an investment in the entity that is potentially significant, because it was determined that the Company did not have the ability to kick out the collateral manager, the Company was not determined to be the primary beneficiary and, hence, not required to consolidate ZAIS CLO 4. As of September 30, 2016, the Company had a beneficial interest of $10.6 million in ZAIS CLO 4. The Company accounts for its investment in ZAIS CLO 4 as an investment security available-for-sale in its consolidated financial statements.

Investments in the Harvest CLO Securities

In September 2013 and March 2014, the Company made investments in Harvest CLO VII Limited and Harvest CLO VIII Limited (collectively, the “Harvest Securities”), respectively, offshore limited liability companies created to acquire syndicated bank loans and issue collateral loan obligations, through its wholly-owned, direct subsidiary Commercial II.  The Harvest Securities are managed by 3i Debt Management Investments Limited (the “Portfolio Manager”), an entity unrelated to the Company, and such collateral management activities were determined to be the activities that most significantly impacted the economic performance of the entity.  The Portfolio Manager can be replaced only for cause by the Harvest Securities’ trustee.  Although the Company has investments in the Harvest Securities that are potentially significant, because it was determined that the Company did not have the ability to unilaterally kick out the Portfolio Manager, the Company was not determined to be the primary beneficiary and, hence, not required to consolidate the Harvest Securities. As of September 30, 2016, the Company had investments of $4.4 million in Harvest CLO VII Limited and $5.2 million in Harvest CLO VIII Limited. The Company accounts for its investments in the Harvest Securities as investment securities available-for-sale in its consolidated financial statements.

Investment in Harvest CLO XV Designated Activity Company

In September 2015, the Company made an investment in Harvest CLO XV Designated Activity Company ("Harvest XV"), an offshore financing vehicle created to acquire and warehouse syndicated bank loans, through its wholly-owned, direct subsidiary Commercial II. In May 2016, the warehouse closed and the Company invested in Harvest CLO XV DAC ("Harvest CLO XV"). The CLO is managed by the Portfolio Manager, and such collateral management activities were determined to be the activities that most significantly impacted the economic performance of the entity. The Portfolio Manager can be replaced only for cause by the entity’s administrative agent. Although the Company has an investment in the entity that is potentially significant, because it was determined that the Company did not have the ability to unilaterally kick out the collateral manager, the Company was not determined to be the primary beneficiary and, hence, not required to consolidate Harvest CLO XV. As of September 30, 2016, the Company's investment in Harvest CLO XV is $14.0 million. The Company accounts for its investment in Harvest CLO XV as an investment security available-for-sale in its consolidated financial statements.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs as of September 30, 2016 (in thousands):

	Unconsolidated Variable Interest Entities
	LCC		Unsecured Junior Subordinated Debentures			RCAM Managed CDOs		Investment in ZAIS CLO		Investment in Harvest CLOs		RREF CDO 2007-1		Apidos Cinco CDO		RCM Global LLC		Pelium Capital		Pearlmark Mezz		Total		Maximum Exposure to Loss
Investments in unconsolidated entities	$	44,777	$	1,548		$	—	$	—	$	—	$	—	$	—	$	306	$	24,767	$	16,751	$	88,149	$	88,149
Investment securities, available-for-sale	—		—			—		10,619		23,590		94,353		20,012		—		—		—		148,574		$	148,574
Intangible assets	—		—			512		—		—		—		—		—		—		—		512		$	512
Total assets	44,777		1,548			512		10,619		23,590		94,353		20,012		306		24,767		16,751		237,235
Borrowings	—		51,548			—				—		—		—		—		—		—		51,548		N/A
Total liabilities	—		51,548			—				—		—		—		—		—		—		51,548		N/A
Net asset (liability)	$	44,777	$	(50,000	)	$	512	$	10,619	$	23,590	$	94,353	$	20,012	$	306	$	24,767	$	16,751	$	185,687	N/A

As of September 30, 2016, there were no explicit arrangements or implicit variable interests that could require the Company to provide financial support to any of its unconsolidated VIEs.

XML

SUPPLEMENTAL CASH FLOW INFORMATION

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosure of cash flow information is summarized for the periods indicated (in thousands):

	For the Nine Months Ended
	September 30,
	2016			2015
Non-cash operating activities include the following:
Reclassification of linked transactions, net at fair value to investment securities available-for-sale, pledged as collateral, at fair value and borrowings (1)	$	—		$	15,367
Interest expense paid by third party (2)	$	(107	)	$	—
Operating liabilities assumed by third party (2)	$	(192	)	$	—
Non-cash investing activities include the following:
Reclassification of linked transactions, net at fair value to investment securities available-for-sale, pledged as collateral, at fair value (1)	$	—		$	48,764
Retained beneficial interest in unconsolidated securitization entities	$	(22,476	)	$	—
Loans acquired through collateralized debt obligation liquidation	$	(44,893	)	$	—
Securities acquired through collateralized debt obligation liquidation	$	(20,837	)	$	—
Non-cash financing activities include the following:
Distributions on common stock accrued but not paid	$	13,012		$	20,667
Distributions on preferred stock accrued but not paid	$	4,010		$	4,077
Reclassification of linked transactions, net at fair value to borrowings (1)	$	—		$	33,397
Senior secured revolving credit facility assumed by third party (2)	$	(122,000	)	$	—
Senior secured revolving credit facility paid down by third party (2)	$	(22,000	)	$	—

(1) As a result of an accounting standards update adopted on January 1, 2015, the Company unlinked its previously linked transactions, resulting in non-cash increases in both its investment securities available-for-sale, pledged as collateral, at fair value and related repurchase agreements borrowings balances.

(2) On August 4, 2016, the Company completed the sale of Northport TRS, LLC. The Purchaser assumed $122.0 million and paid down $22.0 million of principal and $107,000 of interest expense on the Company’s behalf of the senior secured revolving credit agreement. The Purchaser assumed $192,000 of accounts payable and accrued legal fees recorded to complete the sale. See Note 7.

XML

INVESTMENT SECURITIES TRADING

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES TRADING

NOTE 5 - INVESTMENT SECURITIES, TRADING

Structured notes are CLO debt securities collateralized by syndicated bank loans, and RMBS is a type of mortgage-backed debt obligation whose cash flows come from residential mortgage debt. The following table summarizes the Company's structured notes and RMBS that are classified as investment securities, trading and carried at fair value (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
As of September 30, 2016:
Structured notes	$	5,914	$	419	$	(2,586	)	$	3,747
Total	$	5,914	$	419	$	(2,586	)	$	3,747
As of December 31, 2015:
Structured notes	$	28,576	$	1,674	$	(4,700	)	$	25,550
RMBS	1,896		—		(1,896		)	—
Total	$	30,472	$	1,674	$	(6,596	)	$	25,550

As a result of updated accounting guidance, effective January 1, 2016 (see Note 2), the Company deconsolidated all of the assets of Pelium Capital, resulting in the removal of $21.9 million of investment securities, trading from its balance sheet, which is the primary cause of the decrease of securities during the period. The Company sold no investment securities during the three and nine months ended September 30, 2016. The Company sold nine and 19 investment securities during the three and nine months ended September 30, 2015 for a net realized gain of approximately $750,000 and $1.4 million, respectively. The Company held six and 56 investment securities, trading as of September 30, 2016 and December 31, 2015, respectively.

XML

INVESTMENT SECURITIES AVAILABLE-FOR-SALE

9 Months Ended

Sep. 30, 2016

Available-for-sale Securities [Abstract]

INVESTMENT SECURITIES AVAILABLE-FOR-SALE

NOTE 6 - INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The following table summarizes the Company's investment securities, including those pledged as collateral and classified as available-for-sale. ABS may include, but are not limited to the Company's investments in RREF CDO 2007-1, Apidos Cinco CDO, Harvest CLO Securities, ZAIS and other securities backed by syndicated bank loans, and other loan obligations. These securities are carried at fair value (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value(1)
As of September 30, 2016:
ABS	$	149,320	$	3,975	$	(149	)	$	153,146
CMBS	82,595		477		(1,311		)	81,761
RMBS	1,624		174		—			1,798
Total	$	233,539	$	4,626	$	(1,460	)	$	236,705
As of December 31, 2015:
ABS	$	41,994	$	3,218	$	(998	)	$	44,214
CMBS	158,584		2,631		(1,791		)	159,424
RMBS	2,156		122		(88		)	2,190
Corporate bonds	2,422		—		(162		)	2,260
Total	$	205,156	$	5,971	$	(3,039	)	$	208,088

(1) As of September 30, 2016 and December 31, 2015, $82.1 million and $162.3 million, respectively, of investment securities available-for-sale were pledged as collateral under related financings.

As a result of updated accounting guidance, effective January 1, 2016 (see Note 2), the Company deconsolidated all of the assets of RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO, resulting in the removal of $364.6 million of loans, pledged as collateral from its balance sheet. These investments are now recorded as investment securities available-for-sale.

The following table summarizes the estimated maturities of the Company’s CMBS, RMBS, ABS and corporate bonds according to their estimated weighted average life classifications (in thousands, except percentages):

Weighted Average Life	Fair Value			AmortizedCost		Weighted Average Coupon
As of September 30, 2016:
Less than one year	$	178,357	(1)	$	179,516	6.29%
Greater than one year and less than five years	15,886			15,489		4.27%
Greater than five years and less than ten years	25,289			22,477		9.98%
Greater than ten years	17,173			16,057		8.74%
Total	$	236,705		$	233,539	6.68%
As of December 31, 2015:
Less than one year	$	117,221	(1)	$	118,215	7.13%
Greater than one year and less than five years	71,370			68,808		5.31%
Greater than five years and less than ten years	12,382			11,271		10.45%
Greater than ten years	7,115			6,862		16.85%
Total	$	208,088		$	205,156	7.03%

(1) The Company expects that the maturity dates of these CMBS and ABS will either be extended or that they will be paid in full.

At September 30, 2016, the contractual maturities of the CMBS investment securities available-for-sale range from October 2016 to December 2022.  The contractual maturity date of RMBS investment securities available-for-sale is June 2029. The contractual maturities of the ABS investment securities available-for-sale range from November 2016 to September 2046.

The following table shows the fair value, gross unrealized losses and number of securities aggregated by investment category and length of time, for those individual investment securities available-for-sale that have been in a continuous unrealized loss position during the periods specified (in thousands, except number of securities):

	Less than 12 Months						More than 12 Months						Total
	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair  Value		Unrealized Losses			Number of Securities
As of September 30, 2016:
ABS	$	1,066	$	(147	)	2	$	40	$	(2	)	1	$	1,106	$	(149	)	3
CMBS	37,798		(950		)	17	13,937		(361		)	5	51,735		(1,311		)	22
RMBS	—		—			—	—		—			—	—		—			—
Total temporarily impaired securities	$	38,864	$	(1,097	)	19	$	13,977	$	(363	)	6	$	52,841	$	(1,460	)	25
As of December 31, 2015:
ABS	$	2,330	$	(824	)	5	$	668	$	(174	)	5	$	2,998	$	(998	)	10
CMBS	79,570		(849		)	31	13,783		(942		)	15	93,353		(1,791		)	46
RMBS	1,157		(88		)	2	—		—			—	1,157		(88		)	2
Corporate bonds	65		(18		)	1	1,327		(144		)	1	1,392		(162		)	2
Total temporarily impaired securities	$	83,122	$	(1,779	)	39	$	15,778	$	(1,260	)	21	$	98,900	$	(3,039	)	60

The unrealized losses in the above table are considered to be temporary impairments due to market factors and are not reflective of credit deterioration.

During the three and nine months ended September 30, 2016, the Company recognized $21.6 million of other-than-temporary impairment on its investment securities available-for-sale.

Of this amount, $20.7 million relates to the Company’s previously consolidated CRE CDO, RREF 2007-1, which is classified as an investment security available-for-sale. The Company’s security interest in the vehicle is supported by 12 CMBS securities and seven CRE loans. As part of the Company's ongoing credit evaluation of its investment securities, third-party appraisals were obtained on six of the seven remaining legacy CRE loans, which are part of the asset pool of the vehicle. The remaining loan was under an agreement of sale. As a result of having the properties supporting the loans appraised, two of the CRE loans in the vehicle were determined to have cost bases in excess of their expected cash flows, as a result of the updated appraisals, causing a collective impairment charge to the cash flows of the vehicle of $20.7 million. The impairment charge on the security reflects the credit impact to the fair value of the security given the results of the updated appraisals and reduces the Company's cost basis in the security permanently. The impairment charge was calculated by comparing the previous projected cash flows of the security to the revised cash flows including the results of the updated appraisals.

The Company recorded other-than-temporary impairment of $241,000 on three positions classified as securities available-for-sale, RMBS during the three and nine months ended September 30, 2016 after it was determined the Company would not be able to recover the full cost basis of these positions due to declines in the future projected cash flows of the securities.

One CMBS position classified as a security available for sale with a par balance of $4.0 million was identified as a position the Company would be required to sell before it could recover its cost basis in the security. As such, the Company recorded the difference between its amortized cost basis and the estimated fair value. Other-than-temporary impairment of $732,000 was recognized during the three and nine months ended September 30, 2016, as a result of the anticipated sale of this security.

During the three and nine months ended September 30, 2015, the Company recognized no other-than-temporary impairment on its investment securities available-for-sale.

The following table summarizes the Company's sales of investment securities available-for-sale (in thousands, except number of securities):

	For the Three Months Ended						For the Nine Months Ended
	Positions Sold	Positions Redeemed	Par Amount Sold/Redeemed		Realized Gain (Loss)		Positions Sold	Positions Redeemed	Par Amount Sold/Redeemed		Realized Gain (Loss)
September 30, 2015:
ABS	8	—	$15,462		$2,437		15	3	$	31,399	$	10,547
RMBS	—	—	$	—	$	—	6	—	$	28,305	$	984

There were no sales or redemptions during the three and nine months ended September 30, 2016.

XML

LOANS

9 Months Ended

Sep. 30, 2016

LOANS HELD FOR INVESTMENT [Abstract]

LOANS

NOTE 7 - LOANS

The following is a summary of the Company’s loans (in thousands):

Loan Description	Principal			Unamortized (Discount) Premium, net (1)			Carrying Value (2) (3)
As of September 30, 2016:
CRE whole loans	$	1,367,998		$	(6,815	)	$	1,361,183
Mezzanine loans (5)	—			—			—
Middle market loans	51,850			(311		)	51,539
Residential mortgage loans, held for investment	3,292			—			3,292
Subtotal loans before allowance	1,423,140			(7,126		)	1,416,014
Allowance for loan loss	(9,433		)	—			(9,433		)
Total loans held for investment, net of allowance	1,413,707			(7,126		)	1,406,581
Middle market loans held for sale	7,182			—			7,182
Residential mortgage loans held for sale, at fair value (4)	190,433			—			190,433
Total loans held for sale	197,615			—			197,615
Total loans, net	$	1,611,322		$	(7,126	)	$	1,604,196
As of December 31, 2015:
Commercial real estate loans:
Whole loans	$	1,640,744		$	(9,943	)	$	1,630,801
B notes	15,934			—			15,934
Mezzanine loans	45,368			4			45,372
Total commercial real estate loans	1,702,046			(9,939		)	1,692,107
Bank loans	134,890			(373		)	134,517
Middle market loans	380,687			(1,235		)	379,452
Residential mortgage loans, held for investment	1,746			—			1,746
Subtotal loans before allowance	2,219,369			(11,547		)	2,207,822
Allowance for loan loss	(47,071		)	—			(47,071		)
Total loans held for investment, net of allowance	2,172,298			(11,547		)	2,160,751
Bank loans held for sale	1,475			—			1,475
Residential mortgage loans held for sale, at fair value (4)	94,471			—			94,471
Total loans held for sale	95,946			—			95,946
Total loans, net	$	2,268,244		$	(11,547	)	$	2,256,697

(1) Amounts include deferred amendment fees of $12,000 being amortized over the life of the loans as of September 30, 2016. Amounts include deferred amendment fees of $42,000 and deferred upfront fees of $12,000 being amortized over the life of the loans as of December 31, 2015.  Amounts also include loan origination fees of $6.7 million and $9.9 million as of September 30, 2016 and December 31, 2015, respectively.

(2) As a result of the consolidation guidance adopted January 1, 2016, the Company deconsolidated loans held for investment in the amount of $271.8 million of its CRE loans and $134.5 million of its bank loans and the related allowance for loan losses of $41.7 million (see Note 2).

(3) Substantially all loans are pledged as collateral under various borrowings as of September 30, 2016 and December 31, 2015, respectively.

(4) Amortized cost approximates fair value.

(5) As a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, a mezzanine loan with a par value of $28.8 million was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero as of September 30, 2016.

Commercial Real Estate Loans

The following is a summary of the Company's commercial real estate loans held for investment (in thousands):

Description	Quantity	Amortized Cost		Contracted Interest Rates	Maturity Dates(3)
As of September 30, 2016:
Whole loans, floating rate (1)(3) (4) (5) (6) (7)	76	$	1,361,183	LIBOR plus 2.50% to LIBOR plus 6.45%	January 2017 to October 2019
Mezzanine loans (10)	1	—		N/A	September 2021
Total (2) (9)	77	$	1,361,183
As of December 31, 2015:
Whole loans, floating rate(1) (3) (4) (5) (6) (7)	87	$	1,630,801	LIBOR plus 1.75% to LIBOR plus 12.00%	February 2016 to February 2019
B notes, fixed rate	1	15,934		8.68%	April 2016
Mezzanine loans, fixed rate (8)	2	45,372		9.01%	September 2016
Total (2)	90	$	1,692,107

(1) Whole loans had $67.3 million and $112.6 million in unfunded loan commitments as of September 30, 2016 and December 31, 2015, respectively.  These unfunded commitments are advanced as the borrowers formally request additional funding as permitted under the loan agreement and any necessary approvals have been obtained.

(2) Totals do not include allowances for loan losses of $9.4 million and $41.8 million as of September 30, 2016 and December 31, 2015, respectively.

(3) Maturity dates do not include possible extension options that may be available to the borrowers.

(4) Includes two whole loans with a combined $11.2 million and $51.2 million senior component as of September 30, 2016 and December 31, 2015, respectively, that entered into modifications in 2016 and 2015 that resulted in a fixed rate of 0.50% as of September 30, 2016 and December 31, 2015, respectively (the difference of which was a result of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1 - see Note 2). The two loans were previously identified as troubled debt restructurings ("TDR's").

(5) Includes four whole loans with a combined $4.5 million in mezzanine components that have interest rates ranging from 1.5% to 5.2% as of September 30, 2016 and December 31, 2015.

(6) Includes a $799,000 junior mezzanine tranche of a whole loan that has a fixed rate of 10.0% as of September 30, 2016 and December 31, 2015.

(7) Contracted interest rates do not include a whole loan with an amortized cost of $2.0 million and $32.5 million as of September 30, 2016 and December 31, 2015, respectively, that entered into modifications in 2016 and 2015 which reduced the floating rate spread to 1.00% as of September 30, 2016 and December 31, 2015, respectively (the difference of which was a result of the deconsolidation of RREF CDO 2007-1 - see Note 2). The loan was previously identified as a TDR.

(8) Contracted interest rates and maturity dates do not include rates or maturity dates associated with one loan with an amortized cost of $38.1 million that was fully reserved as of June 30, 2015.

(9) As a result of updated accounting guidance, effective January 1, 2016 (see Note 2), the Company deconsolidated all of the assets of RREF CDO 2006-1 and RREF CDO 2007-1, resulting in the removal of $271.8 million of loans pledged as collateral from its balance sheet.

(10) As a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, a mezzanine loan with a par value of $28.8 million was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero at September 30, 2016. The mezzanine loan is comprised of two tranches, with maturity dates of November 2016 and September 2021.

The following is a summary of maturity of the Company’s commercial real estate loans, at amortized cost (in thousands):

Description	2016		2017		2018 and Thereafter		Total
As of September 30, 2016:
Whole loans	$	—	$	44,770	$	1,316,413	$	1,361,183
Mezzanine loans (2)	—		—		—		—
Total (1)	$	—	$	44,770	$	1,316,413	$	1,361,183
As of December 31, 2015:	2016		2017		2018 and Thereafter		Total
B notes	$	15,934	$	—	$	—	$	15,934
Mezzanine loans	13,011		—		32,361		45,372
Whole loans	9,958		140,712		1,480,131		1,630,801
Total (1)	$	38,903	$	140,712	$	1,512,492	$	1,692,107

(1) Contractual maturity of commercial real estate loans assumes full exercise of extension options available to borrowers.

(2) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF CDO 2006-1.

At September 30, 2016, approximately 30.4%, 24.3% and 7.2% of the Company's commercial real estate loan portfolio was concentrated in Texas, California, and Georgia, respectively. At December 31, 2015, approximately 28.7%, 26.8%, and 7.4% of the Company's commercial real estate loan portfolio was concentrated in California, Texas, and Georgia, respectively.

Bank Loans

The following table provides information as to the lien position and status of the Company's bank loans, at amortized cost (in thousands) prior to deconsolidation of Apidos Cinco CDO as of January 1, 2016 (see Note 2):

	Apidos I		Apidos Cinco		Total
As of December 31, 2015:
Loans held for investment:
First lien loans	$	—	$	131,281	$	131,281
Second lien loans	—		1,692		1,692
Defaulted first lien loans	—		1,544		1,544
Defaulted second lien loans	—		—		—
Total	—		134,517		134,517
First lien loans held for sale at fair value	153		1,322		1,475
Total	$	153	$	135,839	$	135,992

At September 30, 2016, the Company held no bank loans. At December 31, 2015, the Company’s bank loan portfolio, including loans held for sale, consisted of $134.7 million (net of allowance of $1.3 million) of floating rate loans, which bear interest rates ranging between the three month LIBOR plus 1.25% and the three month LIBOR plus 8% with maturity dates ranging from January 2016 to August 2021.  

The following is a summary of the weighted average maturity of the Company’s bank loans, at amortized cost and loans held-for-sale, at the lower of cost or market (in thousands):

	December 31, 2015
Less than one year	$	3,922
Greater than one year and less than five years	128,480
Five years or greater	3,590
Total	$	135,992

At December 31, 2015, approximately 13.5%, 13.0% and 9.6% of the Company’s bank loan portfolio was concentrated in the collective industry grouping of automobile, diversified/conglomerate service and retail stores, respectively.

Middle Market Loans    

The following table provides information as to the lien position and status of the Company's middle market loans, at carrying value (in thousands):            

	September 30, 2016		December 31, 2015
First Lien	$	—	$	248,367
Second Lien	51,539		127,146
First lien loans held for sale, at fair value - defaulted	4,625		—
Second lien loans held for sale, at fair value	2,557		—
Total	$	58,721	$	375,513

On August 4, 2016, the Company completed the sale of Northport TRS, LLC to CVC Credit Partners and other third parties ("Purchaser") for $247.0 million. The transaction included substantially all of the direct origination middle market loans and one syndicated loan with a par balance of $257.3 million. The Purchaser assumed $122.0 million and paid down $22.0 million on the Company's behalf, of the senior secured revolving credit agreement, for net proceeds of approximately $104.2 million, including repayment of an intercompany loan. The Company retained the remaining broadly syndicated middle market loans and one direct origination middle market loan. See Note 4.

At September 30, 2016, the Company’s middle market loan portfolio consisted of $58.7 million of floating rate loans, which bear interest rates ranging between one or three month LIBOR plus 6.75% and one or three month LIBOR plus 9.00% with maturity dates ranging from December 2018 to July 2023.  

At December 31, 2015, the Company’s middle market loan portfolio consisted of $375.5 million (net of allowance of $3.9 million) of floating rate loans, which bore interest ranging between one or three month LIBOR plus 6.25% and three month LIBOR plus 12.00% with maturity dates ranging from December 2016 to July 2023.  

The following is a summary of the weighted average maturity of the Company’s middle market loans, at carrying value (in thousands):

	September 30, 2016		December 31, 2015
Less than one year	$	—	$	14,960
Greater than one year and less than five years	20,274		250,709
Five years or greater	38,447		109,844
Total	$	58,721	$	375,513

At September 30, 2016 approximately 17.8% of the Company's middle market loan portfolio was concentrated in the collective industry grouping of beverage, food and tobacco and 16.8% of the Company's middle market loan portfolio was concentrated in the collective industry grouping of healthcare, education, and childcare.

At December 31, 2015, approximately 12.8% of the Company's middle market loan portfolio was concentrated in the collective industry grouping of diversified and conglomerate service and 12.4% of the Company's middle market loan portfolio was concentrated in the collective industry grouping of healthcare, education, and childcare.

Residential Mortgage Loans

The Company originates and services residential mortgage loans through its indirect wholly-owned subsidiary PCM. PCM is an approved seller/servicer for the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association and is licensed to originate loans insured by the Federal Housing Administration, the Department of Veterans Affairs and the United States Department of Agriculture. PCM is licensed to transact business in 41 states. In order to maintain its licenses and status as an approved seller/servicer, PCM must meet certain capital requirements. PCM was in compliance with those capital requirements as of September 30, 2016.

Residential mortgage loans held for sale, at fair value, consisted of $138.2 million and $52.2 million of agency-conforming and jumbo mortgage loans, respectively, as of September 30, 2016. Residential mortgage loans held for sale, at fair value, consisted of $29.2 million and $65.3 million of agency-conforming and jumbo mortgage loans (net of allowance of $11,000), respectively, as of December 31, 2015.

During the quarter ended September 30, 2016, approximately 39.5% of the Company's residential mortgage loans were originated in Georgia, 16.5% in California, 14.9% in Utah, 5.9% in Virginia, and 5.4% in Florida. During the year ended December 31, 2015, approximately 44.9% of the Company's residential mortgage loans were originated in Georgia, 11.2% in Utah, 9.1% in Virginia, 4.4% in Florida, and 4.1% in Colorado.

Allowance for Loan Losses

The following is a summary of the allocation of the allowance for loan loss with respect to the Company's loans (in thousands, except percentages) by asset class (in thousands):

Description	Allowance for Loan Loss		Percentage of Total Allowance
As of September 30, 2016:
CRE whole loans	$	9,422	99.88%
Mezzanine loans (2)	—		—%
Residential mortgage loans	11		0.12%
Total (1)	$	9,433
As of December 31, 2015:
B notes	$	15	0.03%
Mezzanine loans	38,079		80.90%
CRE whole loans	3,745		7.96%
Bank loans	1,282		2.72%
Middle market loans	3,939		8.37%
Residential mortgage loans	11		0.02%
Total	$	47,071

(1) As a result of amendments to consolidation accounting guidance adopted January 1, 2016, the Company deconsolidated loans held for investment in the amount of $271.8 million of its CRE loans and $134.5 million of its bank loans and the related allowance for loan losses of $41.7 million (see Note 2).

(2) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF CDO 2006-1.

Principal Paydown Receivables

Principal paydown receivables represent the portion of the Company's loan portfolio for which indication has been provided through its various servicers, trustees, or its asset management group that a payoff or paydown of a loan has been received but which, as of period end, the Company has not received and applied to the outstanding loan balance. At September 30, 2016, the Company had $44.6 million principal paydown receivables, the entirety of which the Company received in cash during October 2016. At December 31, 2015, principal paydown receivables relating to the Company's loan portfolio totaled $17.9 million, the entirety of which the Company received in cash during January 2016.

XML

INVESTMENTS IN UNCONSOLIDATED ENTITIES

9 Months Ended

Sep. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

NOTE 8 - INVESTMENTS IN UNCONSOLIDATED ENTITIES

The following table shows the Company's investments in unconsolidated entities as of September 30, 2016 and December 31, 2015 and equity in earnings of unconsolidated subsidiaries for the three and nine months ended September 30, 2016 and 2015 (in thousands):

						Equity in Earnings of Unconsolidated Subsidiaries
		Balance as of		Balance as of		For the three months ended			For the nine months ended			For the three months ended			For the nine months ended
	Ownership %	September 30, 2016		December 31, 2015		September 30, 2016			September 30, 2016			September 30, 2015			September 30, 2015
RRE VIP Borrower, LLC (1)	—%	$	—	$	—	$	—		$	35		$	—		$	46
Investment in LCC Preferred Stock	29.0%	44,777		42,017		415			2,759			961			1,362
Investment in CVC Global Credit Opportunities Fund (2)	—%	—		—		—			—			(628		)	293
Pearlmark Mezz (3)	47.7%	16,751		6,465		132			552			—			—
RCM Global, LLC(4)	28.6%	306		—		(560		)	(160		)	—			—
Pelium Capital Partners, L.P. (4)	80.2%	24,767		—		1,045			2,765			—			—
Investment in School Lane House (5)		—		—		—			(1		)	1			1
Subtotal		86,601		48,482		1,032			5,950			334			1,702
Investment in RCT I and II (6)	3.0%	1,548		1,548		(636		)	(1,928		)	(610		)	(1,805		)
Total		$	88,149	$	50,030	$	396		$	4,022		$	(276	)	$	(103	)

(1) The investment in RRE VIP Borrower was sold as of December 31, 2014. Earnings for the three and nine months ended September 30, 2016 and 2015 are related toinsurance premium and property tax refunds and the liquidation of bank accounts with respect to the underlying sold properties of the portfolio.

(2) In December 2015, the Company elected a full redemption of its remaining investment in the fund.

(3) The Company has committed to invest up to $50.0 million in Pearlmark Mezzanine Realty Partners IV, L.P. The commitment termination date ends the earlier of when the original commitment is fully funded, or the fifth anniversary following the final closing date of June 24, 2015.

(4) Pursuant to the new consolidation guidance adopted January 1, 2016, these previously consolidated VIEs are now accounted for under the equity method.

(5) Investment in School Lane House was sold as of December 31, 2014. Earnings for the three and nine months ended September 30, 2016 and 2015 related to the return of a security deposit and payment of an insurance claim.

(6) For the three and nine months ended September 30, 2016 and 2015, these amounts are recorded in interest expense on the Company's consolidated statements of operations.

XML

FINANCING RECEIVABLES

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

FINANCING RECEIVABLES

NOTE 9 - FINANCING RECEIVABLES

The following tables show the allowance for loan and lease losses and recorded investments in loans and leases for the years indicated (in thousands):

	Commercial Real Estate Loans			Bank Loans			Middle Market Loans			Residential Mortgage Loans			Direct Financing Leases		Total
As of September 30, 2016:
Allowance for Loan and Leases Losses:
Allowance for losses at January 1, 2016	$	41,839		$	1,282		$	3,939		$	11		$	465	$	47,536
Provision (recovery) for loan and lease losses	7,997			(358		)	12,180			—			—		19,819
Loans charged-off	—			358			(16,119		)	—			—		(15,761		)
Deconsolidation of VIEs	(40,414		)	(1,282		)	—			—			—		(41,696		)
Allowance for losses at September 30, 2016	$	9,422		$	—		$	—		$	11		$	465	$	9,898
Ending balance:
Individually evaluated for impairment	$	8,059		$	—		$	—		$	—		$	465	$	8,524
Collectively evaluated for impairment	$	1,363		$	—		$	—		$	11		$	—	$	1,374
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
Loans and Leases:
Ending balance:
Individually evaluated for impairment	$	38,133		$	—		$	51,539		$	—		$	1,036	$	90,708
Collectively evaluated for impairment	$	1,323,050		$	—		$	—		$	3,292		$	—	$	1,326,342
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
As of December 31, 2015:
Allowance for Loan and Lease Losses:
Allowance for losses at January 1, 2015	$	4,043		$	570		$	—		$	—		$	—	$	4,613
Provision for loan and lease losses	37,735			2,887			8,901			(99		)	465		49,889
Loans charged-off	—			(2,175		)	(4,962		)	110			—		(7,027		)
Recoveries	61			—			—			—			—		61
Allowance for losses at December 31, 2015	$	41,839		$	1,282		$	3,939		$	11		$	465	$	47,536
Ending balance:
Individually evaluated for impairment	$	40,274		$	1,282		$	—		$	—		$	465	$	42,021
Collectively evaluated for impairment	$	1,565		$	—		$	3,939		$	11		$	—	$	5,515
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
Loans and Leases:
Ending balance:
Individually evaluated for impairment	$	169,707		$	1,544		$	—		$	—		$	1,396	$	172,647
Collectively evaluated for impairment	$	1,522,400		$	132,973		$	379,452		$	1,746		$	—	$	2,036,571
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—

Credit quality indicators

Commercial Real Estate Loans

Loans are graded at inception and updates to assigned grades are made continually as new information is received. As a result, a loan previously rated 4 may, over time and with improved performance, be rated better than 4. Loans are graded on a scale of 1 to 4 with 1 representing the Company’s highest rating and 4 representing its lowest rating. Commercial real estate loans are first individually evaluated for impairment. To the extent no individual impairment is determined, a general reserve is established.

The characteristics of each rating category are as follows:

1. A loan with a rating of a 1 is considered to have satisfactory performance with no issues noted. All interest and principal payments are current and the probability of loss is remote;

2. A loan is graded with a rating of a 2 if a surveillance trigger event has occurred, but loss is not probable at this time. Such trigger events could include but are not limited to a trending decrease in occupancy rates or a flattening of lease revenues; and to a lesser extent, ground lease defaults, ground lease expirations that occur in the next six months or the borrower is delinquent on payment of property taxes or insurance.;

3. A loan with a rating of 3 has experienced an extended decline in operating performance, a significant deviation from its origination plan or the occurrence of one or more surveillance trigger events which create an increased risk for potential default. Loans identified in this category show some liquidity concerns. However, the risk of loss is not specifically assignable to any individual loan. The noted risk of the loans in this category is generally covered by general reserves;

4. A loan with a rating of a 4 is considered to be in payment default or default is expected, full recovery of the unpaid principal balance is improbable and loss is considered probable. The noted risk of the loans in this category is covered by specific reserves.

Credit risk profiles of commercial real estate loans were as follows (in thousands):

	Rating 1 (2)		Rating 2		Rating 3		Rating 4 (3)		Held for Sale		Total
As of September 30, 2016:
CRE whole loans	$	1,232,641	$	99,083	$	—	$	29,459	$	—	$	1,361,183
Mezzanine loans (1)	—		—		—		—		—		—
	$	1,232,641	$	99,083	$	—	$	29,459	$	—	$	1,361,183
As of December 31, 2015:
CRE whole loans	$	1,596,099	$	32,500	$	—	$	2,202	$	—	$	1,630,801
B notes	15,934		—		—		—		—		15,934
Mezzanine loans	7,300		—		—		38,072		—		45,372
	$	1,619,333	$	32,500	$	—	$	40,274	$	—	$	1,692,107

(1) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF 2006-1.

(2) Includes four loans which were impaired as of December 31, 2015.

(3) Includes three loans which were impaired as of September 30, 2016.

As part of the Company’s ongoing loan monitoring, third-party appraisal services were obtained on six legacy CRE loans during the quarter ended September 30, 2016. As a result of the evaluation of those appraisals, it was determined that two loans previously disclosed as impaired loans, one in Studio City, CA with an amortized cost of $27.5 million and the other in Tucson, AZ with an amortized cost of $2.0 million, had cost bases in excess of their appraised values. As such, for the three and nine months ended September 30, 2016, the Company recorded specific provisions of $6.1 million on the Studio City, CA loan and $2.0 million on the Tucson, AZ loan. Previously, the Studio City, CA loan was under contract for sale at a value in excess of the Company's loan amount. The contract for sale was terminated in October 2016. The Tucson, AZ loan was previously supported by a broker’s opinion of value received as of December 31, 2015. The updated appraisal, after factoring in modified terms with the operating manager, and adjustments to projected occupancy and the average daily rate, returned a fair value below our cost basis, resulting in the full impairment of the portion of this whole loan held directly on balance sheet. A portion of this whole loan is also held in RREF CDO 2007-1. The provisions recorded against these loans reflect the estimated recoverable value. These and other assets in the loan pool continue to be monitored consistent with the Company’s impairment evaluation process.

The Company also had six loans classified as rating 2 due to surveillance triggers being registered. Of the six loans, several will be classified as loans held for sale as of December 31, 2016 (see Note 24). The other two loans had surveillance trigger events due to a mechanics lien and a code violation. These two loans were not considered impaired as of September 30, 2016.

All of the Company's commercial real estate loans were current with exception of one mezzanine loan that had defaulted as of September 30, 2016 and December 31, 2015. This loan was deconsolidated as part of the Company's adoption of amendments to consolidation accounting guidance as required on January 1, 2016 (see Note 2). However, as a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, par value of $28.8 million of this mezzanine loan was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero at September 30, 2016.

Bank Loans

Loans are graded at inception and updates to assigned grades are made continually as new information is received. Loans are graded on a scale of 1 to 5 with 1 representing the Company’s highest rating and 5 representing its lowest rating. Bank loans are first individually evaluated for impairment. To the extent no individual impairment is determined, a general reserve is established.

The characteristics of each rating category are as follows:

1. Loans with a rating of 1 are considered performing within expectations. All interest and principal payments are current, all future payments are anticipated and loss is not probable;

2. Loans with a rating of a 2 are considered to have limited liquidity concerns and are watched closely. Loans identified in this category show remote signs of liquidity concerns, loss is not probable and therefore no reserve is established;

3. Loans with a rating of a 3 are considered to have possible future liquidity concerns. Loans identified in this category show some liquidity concerns, but the ability to estimate potential defaults is not quantifiable and therefore no reserve is established;

4. Loans with a rating of a 4 are considered to have nearer term liquidity concerns. These loans have a reasonable possibility of future default. However, the risk of loss is not assignable to one specific credit. The noted risk of the loans in this category is covered by general reserves; and

5. Loans with a rating of a 5 have defaulted in payment of principal and interest or default is imminent. It is probable that impairment has occurred on these loans based on their payment status and that impairment is estimable. The noted risk of the loans in this category is covered by specific reserves.

Credit risk profiles of bank loans were as follows (in thousands):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Held for Sale		Total
As of December 31, 2015:
Bank loans	$	113,897	$	17,578	$	1,498	$	—	$	1,544	$	1,475	$	135,992

As of September 30, 2016 all of the Company's bank loans were deconsolidated (see Note 2). As of December 31, 2015, all of the Company's bank loans were current with respect to debt service with the exception of one loan with an amortized aggregate cost of $1.5 million, on which there was a reserve.

Middle Market Loans

At inception, all middle market loans are graded at a 2. Updates to assigned grades are made continually as new information is received. Loans are graded on a scale of 1 to 5 with 1 representing the Company’s highest rating and 5 representing its lowest rating. Middle market loans are only evaluated individually for impairment.

The characteristics of each rating category are as follows:

1. A loan with a rating of a 1 is considered performing above expectations and the likelihood of loss is remote;

2. A loan with a rating of a 2 is considered performing within expectations and the likelihood of loss is remote;

3. A loan with a rating of a 3 is considered performing below expectations and requires close monitoring but no loss of interest or principal is expected. Loans receiving this rating may be out of compliance with financial covenants; however, these loans are current with respect to interest and principal;

4. A loan with a rating of a 4 is considered performing below expectations and some loss of interest or dividend is expected but no loss of principal. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due, but generally not more than 180 days past due; and

5. A loan with a rating of a 5 is considered performing substantially below expectations, in default and some loss of principal is expected. The borrower is out of compliance with most or all of the debt covenants and payments are substantially delinquent.

Credit risk profiles of middle market loans were as follows (in thousands):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Held for Sale		Total
As of September 30, 2016:
Middle market loans	$	—	$	40,048	$	11,491	$	—	$	—	$	7,182	$	58,721
As of December 31, 2015:
Middle market loans	$	44,252	$	305,578	$	29,622	$	—	$	—	$	—	$	379,452

As of September 30, 2016, the Company's syndicated loans were all performing and one remaining directly originated loan classified as held for sale was in default. The Company recorded an additional unrealized loss on this loan of $9.6 million, included in the net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives line item on the consolidated statement of operations, representing the lower of the loan's cost or fair value based on an updated third party valuation at September 30, 2016. The rest of the Company's portfolio is current with respect to debt service.  All of the Company’s middle market loans were current with respect to debt service as of December 31, 2015.

Residential Mortgage Loans

Residential mortgage loans are reviewed periodically for collectability in light of historical experience, the nature and amount of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral, and prevailing underlying conditions.

Direct Financing Leases

During the year ended December 31, 2015, the Company recorded a provision against the value of the direct financing leases in the amount of $465,000. As of September 30, 2016, the Company held $571,000 of direct financing leases, net of reserves.

Loan Portfolios Aging Analysis

The following table presents the loan and lease portfolio aging analysis as of the dates indicated at amortized cost (in thousands):

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
As of September 30, 2016:
CRE whole loans	$	—	$	—	$	—	$	—	$	1,361,183	$	1,361,183	$	—
Mezzanine loans (3)	—		—		—		—		—		—		—
Middle market loans (4)	—		4,625		—		4,625		54,096		58,721		—
Direct Financing Leases	5		—		—		5		1,031		1,036		—
Residential mortgage loans (1)	—		—		129		129		193,597		193,726		—
Total loans	$	5	$	4,625	$	129	$	4,759	$	1,609,907	$	1,614,666	$	—
As of December 31, 2015:
CRE whole loans (2)	$	—	$	—	$	—	$	—	$	1,630,801	$	1,630,801	$	—
B notes	—		—		—		—		15,934		15,934		—
Mezzanine loans	—		38,072		—		38,072		7,300		45,372		—
Bank loans	1,544		—		—		1,544		132,973		134,517		—
Middle market loans	—		—		—		—		379,452		379,452		—
Direct Financing Leases	12		214		—		226		1,170		1,396		—
Residential mortgage loans (1)	27		41		80		148		96,069		96,217		—
Total loans	$	1,583	$	38,327	$	80	$	39,990	$	2,263,699	$	2,303,689	$	—

(1) Contains $190.4 million and $94.5 million of residential mortgage loans held for sale at fair value at September 30, 2016 and December 31, 2015, respectively.

(2) Current loans include one impaired whole loan with an amortized cost of $2.2 million, which was fully reserved as of December 31, 2015.

(3) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF 2006-1.

(4) Contains one middle market loan held for sale at fair value of $4.6 million at September 30, 2016.

Impaired Loans

The following tables show impaired loans as of the dates indicated (in thousands):

	Recorded Balance (1)		Unpaid Principal Balance		Specific Allowance			Average Investment in Impaired Loans		Interest Income Recognized
As of September 30, 2016:
Loans without a specific valuation allowance:
CRE whole loans	$	8,674	$	8,674	$	—		$	8,674	$	434
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Loans with a specific valuation allowance:
CRE whole loans	$	29,459	$	29,459	$	(8,059	)	$	29,459	$	65
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Bank loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Total:
CRE whole loans	$	38,133	$	38,133	$	(8,059	)	$	38,133	$	499
Mezzanine loans	—		—		—			—		—
Middle market loans	—		—		—			—		—
Residential mortgage loans	—		—		—			—		—
	$	38,133	$	38,133	$	(8,059	)	$	38,133	$	499
As of December 31, 2015:
Loans without a specific valuation allowance:
CRE whole loans	$	129,433	$	129,433	$	—		$	128,591	$	3,939
B notes	$	—	$	—	$	—		$	—	$	—
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Bank loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Loans with a specific valuation allowance:
CRE whole loans	$	2,202	$	2,202	$	(2,202	)	$	2,202	$	63
B notes	$	—	$	—	$	—		$	—	$	—
Mezzanine loans	$	38,072	$	38,072	$	(38,072	)	$	38,072	$	(2,879	)
Bank loans	$	1,544	$	1,551	$	(1,282	)	$	1,544	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Total:
CRE whole loans	$	131,635	$	131,635	$	(2,202	)	$	130,793	$	4,002
B notes	—		—		—			—		—
Mezzanine loans	38,072		38,072		(38,072		)	38,072		(2,879		)
Bank loans	1,544		1,551		(1,282		)	1,544		—
Middle market loans	—		—		—			—		—
Residential mortgage loans	—		—		—			—		—
	$	171,251	$	171,258	$	(41,556	)	$	170,409	$	1,123

(1) As a result of the adoption of new consolidation accounting guidance as required on January 1, 2016, the Company deconsolidated $91.3 million of senior participations in four loans that were previously classified as impaired loans in the Company's consolidated financial statements as of December 31, 2015 (see Note 2).

Troubled-Debt Restructurings

The following tables show troubled-debt restructurings in the Company's loan portfolio (in thousands):

	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Nine Months Ended September 30, 2016
CRE whole loans	3	$	29,459	$	21,400
Mezzanine loans	—	—		—
Middle market loans	—	—		—
Residential mortgage loans	—	—		—
Total loans	3	$	29,459	$	21,400
	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Nine Months Ended September 30, 2015
CRE whole loans	3	$	99,959	$	99,959
B notes	—	—		—
Mezzanine loans	1	38,072		—
Bank loans	—	—		—
Middle market loans	—	—		—
Residential mortgage loans	—	—		—
Total loans	4	$	138,031	$	99,959

As of September 30, 2016 and 2015, there were no commercial real estate loan troubled-debt restructurings that subsequently defaulted.

XML

BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

BUSINESS COMBINATIONS

NOTE 10 - BUSINESS COMBINATIONS

On February 26, 2014, the Company made an additional capital contribution to LCF which gave the Company majority ownership at 50.2%. As a result, the Company began consolidating the LCF joint venture. The joint venture was established for the purpose of acquiring life settlement contracts through a financing facility. On April 30, 2015, the Company committed to another capital contribution in the amount of $750,000, increasing its ownership of LCF to 60.7%. The first installment of $375,000 was funded on April 30, 2015 and the second installment of $375,000 was funded on July 30, 2015. On December 15, 2015, the Company committed to an additional capital contribution in the amount of $1.3 million, increasing its ownership of LCF to 70.9%. The first installment of $750,000 was funded on January 5, 2016 and the second installment of $500,000 was funded on June 30, 2016.

The Company engaged a third party expert to assist in determining the fair values of the assets and liabilities assumed on this investment. Based on the final valuation, which determined an enterprise value of LCF of approximately $4.1 million, and in accordance with guidance on business combinations, the Company confirmed that no further adjustments were necessary.

XML

INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

NOTE 11 - INTANGIBLE ASSETS

The following table summarizes the activity of intangible assets for the period indicated (in thousands):

	Management Contracts			Wholesale/Correspondent Relationships		Mortgage Servicing Rights			Total
Balance, January 1, 2016	$	5,316		$	90	$	20,822		$	26,228
Additions	—			—		13,815			13,815
Sales	—			—		—			—
Amortization	(1,133		)	—		(3,753		)	(4,886		)
Total before impairment adjustment	4,183			90		30,884			35,157
Temporary impairment adjustment	—			—		(5,600		)	(5,600		)
Other than temporary impairment adjustment	(3,671		)	—		—			(3,671		)
Balance, September 30, 2016	$	512		$	90	$	25,284		$	25,886

Management Contracts and Wholesale/Correspondent Relationships

The Company recognized fee income on management contracts of $553,000 and $1.5 million for the three and nine months ended September 30, 2016, respectively, and $791,000 and $2.7 million for the three and nine months ended September 30, 2015, respectively.

For the three and nine months ended September 30, 2016 the Company recorded amortization expense of $331,000 and $1.1 million, respectively, related to the Company's management contracts. For the three and nine months ended September 30, 2015 the Company recorded amortization expense of $518,000 and $1.5 million related to the Company's management contracts and wholesale/correspondent relationships, respectively. In October 2016, one of the two remaining CLOs associated with the management contracts was called, and the anticipated call date of the other CLO was determined to be early 2017. In accordance with guidance on intangible assets other than goodwill, the Company tested its two remaining management contracts for impairment at September 30, 2016. The carrying amounts of the management contracts were deemed to be unrecoverable and in excess of their fair values, calculated using a discounted cash flow analysis. As a result, an impairment loss of $3.7 million was recognized for the three months ended September 30, 2016 and recorded on the Company’s consolidated statement of operations. The Company expects to record amortization expense on its management contracts of $299,000 for the three months ending December 31, 2016. The Company expects to record amortization expense on its management contracts of $213,000 for the year ending December 31, 2017, and no amortization expense of its management contracts in 2018, 2019 or 2020. The weighted average amortization period was 0.7 years and 5.8 years at September 30, 2016 and December 31, 2015, respectively.

Mortgage Servicing Rights

Through the Company's wholly-owned residential mortgage loan originator PCM, residential mortgage loans are sold through one of the following methods: (i) sales to or pursuant to programs sponsored by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association, or (ii) sales to private investors. The Company may have continuing involvement in mortgage loans sold by retaining servicing rights and servicing obligations.

The total servicing portfolio consists of loans associated with capitalized mortgage servicing rights (“MSRs”) and loans held for sale.  In accordance with guidance on servicing assets and liabilities, the Company utilizes the amortization method for the subsequent measurement of its MSRs. The total servicing portfolio was $3.0 billion and $2.0 billion as of September 30, 2016 and December 31, 2015, respectively.  MSRs recorded in the Company's consolidated balance sheets are related to the capitalized servicing portfolio and are created through the sale of originated residential mortgage loans. Amounts related to capitalized MSRs are recorded in the gain (loss) on sale of residential mortgage loans line item in the Company's statement of operations. Amounts related to temporary impairment adjustments are recorded in fee income in the Company's statement of operations.

For the three and nine months ended September 30, 2016, the Company recognized $1.5 million and $3.8 million of amortization expense related to MSRs, respectively. For the three and nine months ended September 30, 2015, the Company recognized $1.3 million and $3.1 million, respectively. The Company expects to recognize amortization related to its MSRs portfolio in the amount of $1.6 million for the three months ending December 31, 2016, $5.5 million for the year ending December 31, 2017, $4.4 million for the year ending December 31, 2018, $3.5 million for the year ending December 31, 2019, and $2.9 million for the year ending December 31, 2020. The weighted average amortization period was 5.1 years and 6.7 years at September 30, 2016 and December 31, 2015, respectively.

The Company also records MSRs at fair value on a non-recurring basis. MSRs are recorded at fair value at inception and at the end of each reporting period if the fair value is less than unamortized cost. The Company uses a discounted cash flow approach to estimate the fair value of MSRs utilizing the valuation services of an independent third party. The key assumptions used in the estimation of the fair value of MSRs include prepayment speeds, discount rates, default rates, cost to service, contractual servicing fees and escrow earnings. During the three months ended September 30, 2016 the Company recorded temporary impairment of $800,000 increasing the impairment for the nine months endedSeptember 30, 2016 to $5.6 million. The fair value of MSRs was $25.3 million and $21.3 million at September 30, 2016 and December 31, 2015, respectively.

The activity in the loan servicing portfolio associated with capitalized servicing rights consisted of the following (in thousands):

	September 30, 2016			December 31, 2015
Balance, beginning of period	$	1,998,273		$	894,767
Additions	1,288,392			1,236,145
Payoffs, sales and curtailments	(294,899		)	(132,639		)
Balance, end of period	$	2,991,766		$	1,998,273

The value of MSRs is driven by the net positive, or in some cases net negative, cash flows associated with servicing activities.  These cash flows include contractually specified servicing fees, late fees and other ancillary servicing revenue and were recorded within fee income as follows (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Servicing fees from capitalized portfolio	$	1,794	$	1,071	$	4,786	$	2,533
Late fees	$	58	$	37	$	157	$	78
Other ancillary servicing revenue	$	12	$	2	$	24	$	9

XML

BORROWINGS

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

BORROWINGS

NOTE 12 - BORROWINGS

The Company historically has financed the acquisition of its investments, including investment securities and loans, through the use of secured and unsecured borrowings in the form of securitized notes, repurchase agreements, secured term facilities, warehouse facilities, convertible senior notes, senior secured revolving credit agreements and trust preferred securities issuances.  Certain information with respect to the Company’s borrowings is summarized in the following table (in thousands, except percentages):

	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings		Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
As of September 30, 2016:
RCC CRE Notes 2013 Senior Notes	$	16,315	$	136	$	16,179	3.96%	12.2 years	$	63,199
RCC 2014-CRE2 Senior Notes	137,936		2,079		135,857		1.99%	15.6 years	255,062
RCC 2015-CRE3 Senior Notes	206,113		2,630		203,483		2.61%	15.5 years	260,058
RCC 2015-CRE4 Senior Notes	175,987		2,534		173,453		2.33%	15.9 years	262,579
Unsecured Junior Subordinated Debentures	51,548		—		51,548		4.64%	20.1 years	—
6.0% Convertible Senior Notes	115,000		3,654		111,346		6.00%	2.2 years	—
8.0% Convertible Senior Notes	100,000		3,758		96,242		8.00%	3.3 years	—
CRE - Term Repurchase Facilities (2)	338,070		3,101		334,969		2.86%	1.9 years	491,760
CMBS - Term Repurchase Facilities (3)	77,811		29		77,782		2.67%	210 days	113,531
Trust Certificate - Term Repurchase Facility (4)	26,661		320		26,341		6.03%	2.1 years	89,181
Residential Mortgage Financing Agreements (5)	174,642		—		174,642		3.35%	63 days	247,794
Total	$	1,420,083	$	18,241	$	1,401,842	3.48%	7.5 years	$	1,783,164

	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings		Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
As of December 31, 2015:
RREF CDO 2006-1 Senior Notes (1)	$	52,772	$	—	$	52,772	2.60%	30.6 years	$	94,379
RREF CDO 2007-1 Senior Notes (1)	91,752		—		91,752		1.65%	30.8 years	210,904
RCC CRE Notes 2013 Senior Notes	58,465		664		57,801		3.21%	13.0 years	104,439
RCC 2014-CRE2 Senior Notes	198,594		2,991		195,603		1.68%	16.3 years	313,663
RCC 2015-CRE3 Senior Notes	282,127		3,466		278,661		2.25%	16.2 years	341,099
RCC 2015-CRE4 Senior Notes	223,735		3,160		220,575		2.06%	16.6 years	308,042
Apidos Cinco CDO Senior Notes (1)	135,417		—		135,417		1.25%	4.4 years	154,584
Unsecured Junior Subordinated Debentures	51,548		135		51,413		4.40%	20.8 years	—
6.0% Convertible Senior Notes	115,000		4,917		110,083		6.00%	2.9 years	—
8.0% Convertible Senior Notes	100,000		4,599		95,401		8.00%	4.0 years	—
CRE - Term Repurchase Facilities (2)	225,346		2,418		222,928		2.64%	1.6 years	321,267
CMBS - Term Repurchase Facility (3)	25,658		2		25,656		1.57%	1.1 years	31,650
Trust Certificates - Term Repurchase Facility (4)	26,659		415		26,244		5.85%	2.9 years	89,181
Residential Investments - Term Repurchase Facility (5)	782		—		782		2.75%	264 days	835
Residential Mortgage Financing Agreements (6)	85,819		—		85,819		3.10%	257 days	120,952
CMBS - Short Term Repurchase Agreements (7)	57,407		—		57,407		2.06%	18 days	79,347
Senior Secured Revolving Credit Agreement (8)	190,000		3,026		186,974		3.09%	3.2 years	376,306
Total	$	1,921,081	$	25,793	$	1,895,288	2.89%	10.6 years	$	2,546,648

(1) On January 1, 2016, RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO were deconsolidated in accordance with guidance on consolidation (see Note 2).

(2) Amounts also include accrued interest expense of $410,000 and $315,000 related to CRE repurchase facilities as of September 30, 2016 and December 31, 2015, respectively.

(3) Amounts also include accrued interest expense of $136,000 and $18,000 related to CMBS repurchase facilities as of September 30, 2016 and December 31, 2015, respectively. Amounts do not reflect CMBS repurchase agreement borrowings that are components of linked transactions as of December 31, 2015.

(4) Amounts also include accrued interest expense of $62,000 and $61,000 related to trust certificate repurchase facilities as of September 30, 2016andDecember 31, 2015, respectively.

(5) Amounts also include accrued interest expense of $0 and $30,000 related to residential investment facilities as of September 30, 2016 and December 31, 2015, respectively.

(6) The value of collateral related to residential mortgage financing agreements is the appraised value of the collateral underlying the residential mortgage loans subject to repurchase as of September 30, 2016 and December 31, 2015.

(7) Amounts also include accrued interest expense of $0 and $40,000 related to CMBS short term repurchase facilities as of September 30, 2016 and December 31, 2015.

(8) The Company sold its interest in Northport TRS, LLC and the Senior Secured Revolving Credit Agreement was assumed by the purchaser. See Note 4 and Note 7 for further details.

The Company obtained three waivers of certain covenants for its CRE repurchase facilities and Wells Fargo Bank, NA ("Wells Fargo") CMBS repurchase facility as of September 30, 2016. The Company is in compliance with all other covenants in the respective agreements as of September 30, 2016.

Securitizations

The following table sets forth certain information with respect to the Company's consolidated securitizations:

Securitization	Closing Date	Maturity Date	End of Designated Principal Reinvestment Period (1)	Total Note Paydowns as of September 30, 2016
				(in millions)
RCC CRE Notes 2013	December 2013	December 2028	N/A	$	244.5
RCC 2014-CRE2	July 2014	April 2032	July 2016	$	97.4
RCC 2015-CRE3	February 2015	March 2032	February 2017	$	76.0
RCC 2015-CRE4	August 2015	August 2032	August 2017	$	47.7

(1) The designated principal reinvestment period is the period where principal payments received by each respective securitization may be designated by the Company to purchase funding participations of existing collateral originally underwritten at the close of each securitization, which was funded outside of the deal structure.

The investments held by the Company's securitizations collateralize the securitization's borrowings and, as a result, are not available to the Company, its creditors, or stockholders. All senior notes retained at closing or subsequently repurchased by the Company as of September 30, 2016 eliminate in consolidation.

On January 1, 2016, the Company adopted the amendments to the consolidation guidance (see Note 2). As a result of its evaluation, the Company deconsolidated RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO.

Repurchase and Credit Facilities

Borrowings under the Company's repurchase agreements were guaranteed by the Company or one of its subsidiaries. The following table sets forth certain information with respect to the Company's borrowings (in thousands, except percentages):

	As of September 30, 2016						As of December 31, 2015
	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral	Weighted Average Interest Rate	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral	Weighted Average Interest Rate
CMBS Term Repurchase Facilities
Wells Fargo Bank (1)	$	18,608	$	24,008	15	1.82%	$	25,656	$	31,650	21	1.57%
Deutsche Bank (2)	59,174		89,523		20	2.93%	—		—		—	—%
CRE Term Repurchase Facilities
Wells Fargo Bank (3)	194,903		286,199		14	2.66%	123,937		179,169		9	2.39%
Morgan Stanley Bank (4)	140,066		205,561		12	3.15%	98,991		142,098		7	2.96%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015 (5)	26,341		89,181		1	6.03%	26,244		89,181		1	5.85%
Short-Term Repurchase Agreements - CMBS
Wells Fargo Securities, LLC	—		—		—	—%	13,548		19,829		3	1.93%
Deutsche Bank Securities, LLC	—		—		—	—%	43,859		59,518		17	2.10%
Residential Investments Term Repurchase Facility
Wells Fargo Bank	—		—		—	—%	782		835		1	2.75%
Residential Mortgage Financing Agreements
New Century Bank	37,775		48,359		163	3.50%	43,789		61,111		199	3.17%
Wells Fargo Bank	136,867		199,436		457	3.31%	42,030		59,841		166	3.03%
Totals	$	613,734	$	942,267			$	418,836	$	643,232

(1) The Wells Fargo Bank CMBS term repurchase facility includes $3,000 and $2,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(2) The Deutsche Bank CMBS term repurchase facility includes $26,000 and $0 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(3) The Wells Fargo Bank CRE term repurchase facility includes $1.8 million and $675,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(4) The Morgan Stanley Bank CRE term repurchase facility includes $1.3 million and $1.7 million of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(5) The RSO Repo SPE Trust 2015 term repurchase facility includes $320,000 and $415,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

The following table shows information about the amount at risk under the repurchase facilities (dollars in thousands):

	Amount at Risk (1)		Weighted Average Maturity	Weighted Average Interest Rate
As of September 30, 2016:
CMBS Term Repurchase Facilities
Wells Fargo Bank, National Association	$	5,420	123 days	1.82%
Deutsche Bank AG	$	30,672	237 days	2.93%
CRE Term Repurchase Facilities
Wells Fargo Bank, National Association	$	90,393	1.8 years	2.66%
Morgan Stanley Bank, National Association	$	65,065	1.9 years	3.15%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015	$	62,575	2.1 years	6.03%
Residential Mortgage Financing Agreements
New Century Bank	$	10,584	77 days	3.50%
Wells Fargo Bank, National Association	$	62,569	59 days	3.31%

As of December 31, 2015:
CMBS Term Repurchase Facility
Wells Fargo Bank, National Association	$	6,053	1.1 years	1.57%
CRE Term Repurchase Facilities
Wells Fargo Bank, National Association	$	54,674	240 days	2.39%
Morgan Stanley Bank, National Association	$	41,248	2.7 years	2.96%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015	$	62,575	2.9 years	5.85%
Short-Term Repurchase Agreements - CMBS
Wells Fargo Securities, LLC	$	6,288	11 days	1.93%
Deutsche Bank Securities, LLC	$	16,330	20 days	2.05%
Residential Investments Term Repurchase Facility
Wells Fargo Bank, National Association	$	54	264 days	2.75%
Residential Mortgage Financing Agreements
New Century Bank	$	17,322	124 days	3.17%
Wells Fargo Bank, National Association	$	17,811	134 days	3.03%

(1) Equal to the estimated fair value of securities or loans sold, plus accrued interest income, minus the sum of repurchase agreement liabilities plus accrued interest expense.

CRE - Term Repurchase Facilities

In February 2012, RCC Real Estate's wholly-owned subsidiary, RCC Real Estate SPE 4 LLC ("SPE 4"), entered into a master repurchase and securities agreement (the "2012 Facility") with Wells Fargo to finance the origination of commercial real estate loans. In July 2016, in exchange for applicable structuring and extension fees, the Company entered into a fifth amendment of the 2012 Facility which extended the current term to July 2018 with three additional one year extension options exercisable at the Company's option.

Residential Investments – Term Repurchase Facility

In June 2014, the Company's wholly-owned subsidiaries, RCC Resi Portfolio, RCC Resi TRS, and RCC Resi Depositor (the “Sellers”) entered into a master repurchase and securities contract (the “2014 Facility”) with Wells Fargo.  Under the 2014 Facility, from time to time, the parties may enter into transactions in which the Sellers transfer to Wells Fargo all of their right, title and interest to certain residential mortgage backed securities and other assets against the transfer of funds by Wells Fargo to the Sellers, with a simultaneous agreement by Wells Fargo to transfer back to the Sellers such assets at a date certain or on demand, against the transfer of funds from the Sellers to Wells Fargo. In July 2016, the Company elected to terminate the 2014 Facility.

Residential Mortgage Financing Agreements

In February 2011, PCM entered into a master repurchase agreement (the "New Century Facility") with New Century Bank d/b/a Customer's Bank ("New Century") to finance the acquisition of residential mortgage loans. In August 2016, PCM entered into a tenth amendment of the New Century Facility which extended the facility through December 2016 and reduced the maximum borrowing amount from $65.0 million to $50.0 million through October 2016 then to $35.0 million through November 2016 and finally to $25.0 million through December 2016. The New Century Facility's tenth amendment increases the interest margins following the October 2016 maximum amount reduction. New Century's compliance with purchase requests will no longer be required effective November 2016. No other material changes were made to the New Century Facility's terms.

In July 2014, PCM entered into a master repurchase agreement (the "Wells Fargo Facility") with Wells Fargo to finance the acquisition of residential mortgage loans. In May 2016, PCM amended its agreement with Wells Fargo to increase the maximum of the amount of the Wells Fargo Facility from $100.0 million to $115.0 million for the period from May 2016 to June 2016. In June 2016, PCM amended its agreement with Wells Fargo to increase the maximum of the amount of the Wells Fargo Facility from $115.0 million to $150.0 million. In August 2016, PCM entered into a seventh amendment of the Wells Fargo Facility to extend the facility to November 2016. No other material changes were made to the Wells Fargo Facility's terms.

Contractual maturity dates of the Company's borrowings by category and year are presented in the table below (in thousands):

	Total		2016		2017		2018		2019		2020 and Thereafter
CRE Securitizations(1)	$	528,972	$	—	$	—	$	—	$	—	$	528,972
Repurchase Agreements	613,734		174,642		77,782		361,310		—		—
Unsecured Junior Subordinated Debentures	51,548		—		—		—		—		51,548
6.0 % Convertible Notes	111,346		—		—		111,346		—		—
8.0 % Convertible Notes	96,242		—		—		—		—		96,242
Total	$	1,401,842	$	174,642	$	77,782	$	472,656	$	—	$	676,762

(1) At September 30, 2016, RCC CRE Notes 2013's balance of principal paydown receivables relating to its underlying loan portfolio totaled $36.6 million, the entirety of which it received in cash during October 2016. The Company paid down the remaining $16.2 million RCC CRE Notes 2013 borrowings outstanding during October 2016.

XML

SHARE ISSUANCE AND REPURCHASE

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

SHARE ISSUANCE AND REPURCHASE

NOTE 13 - SHARE ISSUANCE AND REPURCHASE

	For the Nine Months Ended   September 30, 2016			Total Outstanding
	Number of Shares Repurchased	Weighted Average Purchase Price		Number of Shares	Weighted Average Offering Price
8.50% Series A Preferred Stock	—	$	—	1,069,016	$	24.29
8.25% Series B Preferred Stock	195,900	$	15.80	5,544,579	$	24.02
8.625% Series C Preferred Stock	—	$	—	4,800,000	$	25.00

On or after June 14, 2017 the Company may, at its option, redeem its Series A preferred stock, in whole or part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

On or after October 2, 2017 the Company may, at its option, redeem its Series B preferred stock, in whole or part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

On or after July 30, 2024, the Company may, at its option, redeem its Series C preferred stock, in whole or part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

Under a dividend reinvestment plan authorized by the board of directors on March 21, 2013, the Company is authorized to issue up to 5,000,000 shares of common stock. During the three and nine months ended September 30, 2016, the Company sold approximately 3,000 and 9,000 shares of common stock through this program, resulting in proceeds of approximately $40,000 and $110,000, respectively.

Under a share repurchase plan authorized by the board of directors on August 3, 2015, the Company is authorized to repurchase up to $50.0 million of its outstanding equity and debt securities. During the nine months ended September 30, 2016, the Company repurchased $9.2 million of its common stock, representing approximately 800,000 shares. Since the inception of the program through September 30, 2016, the Company has repurchased $35.2 million of its common stock, representing approximately 2.8 million shares or 8.3% of the outstanding balance. During the nine months ended September 30, 2016, the Company repurchased $3.1 million of its outstanding Series B preferred stock, representing approximately 196,000 shares or 3.4% of the initial outstanding balance. In March 2016, the Company's board of directors approved a new securities repurchase program for up to $50.0 million of its outstanding securities, which replaced the August 2015 repurchase plan.

XML

SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION

NOTE 14 - SHARE-BASED COMPENSATION

The following table summarizes the Company's restricted common stock transactions:

	Non-Employee Directors (1)		Non-Employees		Employees		Total
Unvested shares as of January 1, 2016	15,267		617,657		58,445		691,369
Issued	25,948		230,338		50,784		307,070
Vested	(13,895	)	(469,074	)	(18,452	)	(501,421	)
Forfeited	—		(262	)	—		(262	)
Unvested shares as of September 30, 2016	27,320		378,659		90,777		496,756

(1) Non-employees are employees of Resource America.

The Company is required to value any unvested shares of restricted common stock granted to non-employees at the current market price.  The estimated fair value at grant date of the unvested shares of restricted common stock granted to non-employees during the nine months ended September 30, 2016 and 2015 was $2.3 million and $4.9 million, respectively. The estimated fair value at grant date of unvested shares of restricted common stock issued to the Company’s eight non-employee directors during the nine months ended September 30, 2016 and 2015 was $290,000 and $256,000, respectively. The estimated fair value of the unvested shares of restricted common stock granted during the nine months ended September 30, 2016 and 2015, including the grant date fair value of shares issued to the Company’s employees, was $483,000 and $737,000, respectively.

The Company records any unvested shares of restricted common stock granted to non-employee directors at the fair value on the grant date amortized over the service period.  The amortization recognized during the three and nine months ended September 30, 2016 and 2015 was $64,000 and $192,000 and $64,000 and $193,000, respectively.

As of September 30, 2016, the total unrecognized restricted common stock expense for non-employees was $2.2 million, with a weighted average amortization period remaining of 2.0 years.

The following table summarizes restricted common stock grants during the nine months ended September 30, 2016:

Date	Shares	Vesting/Year	Date(s)
January 21, 2016	130,903	33.3%	1/21/17, 1/21/18, 1/21/19
January 21, 2016	50,784	33.3%	1/21/17, 1/21/18, 1/21/19
February 1, 2016	3,421	100%	2/1/17
February 5, 2016	90,595	33.3%	2/5/17, 2/5/18, 2/5/19
March 8, 2016	13,912	100%	3/8/17
March 14, 2016	3,158	100%	3/14/17
March 31, 2016	8,840	100%	5/15/17(1)
June 6, 2016	2,702	100%	6/6/17
September 29, 2016	2,755	100%	9/29/17

(1) In connection with a grant of restricted common stock made on September 24, 2014, the Company agreed to issue up to 17,682 shares of common stock if certain loan origination performance thresholds were achieved by personnel from the Company’s loan origination team.  The performance criteria were measured at the end of two annual measurement periods which began April 1, 2014.  The agreement also provided dividend equivalent rights pursuant to which the dividends that would have been paid on the shares had they been issued on the date of grant were paid at the end of each annual measurement period if the performance criteria were met.  If the performance criteria were not met, the accrued dividends would be forfeited.  As a consequence, the Company did not record the dividend equivalent rights until earned.  On March 31, 2016, the final measurement period ended and 8,840 shares were earned. Approximately $42,000 of accrued dividend equivalent rights were paid in April 2016. These shares will vest over the subsequent 12 months at a rate of one-fourth per quarter.

The following table summarizes the status of the Company’s vested stock options as of September 30, 2016:

Vested Options	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Vested as of January 1, 2016	26,250	$	46.60
Vested	—	—
Exercised	—	—
Forfeited	—	—
Expired	—	—
Vested as of September 30, 2016	26,250	$	46.60	2.20	$	—

There were no options granted during the nine months endedSeptember 30, 2016 or 2015. The outstanding stock options have a contractual term of ten years, and will expire in May 2021.

The components of equity compensation expense for the periods presented is as follows (in thousands):

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2016		2015			2016		2015
Restricted shares granted to non-employees (1) (2)	$	1,639	$	(466	)	$	3,352	$	840
Restricted shares granted to employees	63		177			900		528
Restricted shares granted to non-employee directors	64		64			192		193
Total equity compensation expense	$	1,766	$	(225	)	$	4,444	$	1,561

(1) Non-employees are employees of Resource America.

(2) Amounts include $896,000 of equity compensation expense, for the three and nine months ended September 30, 2016, associated with the accelerated stock vesting of former executives of the Company.

Under the Company's Management Agreement, incentive compensation is paid quarterly. Up to 75% of the incentive compensation is paid in cash and at least 25% is paid in the form of an award of common stock. There were no incentive fees paid to the Manager for the three and nine months ended September 30, 2016 and 2015.

Apart from incentive compensation payable under the Management Agreement, the Company has established no formal criteria for the issuance of equity awards as of September 30, 2016.  All awards are discretionary in nature and subject to approval by the compensation committee of the Company's board of directors.

On October 31, 2013, the Company, through its TRS, RCC Residential, completed a business combination whereby it acquired the assets of PCM, an Atlanta based company that originates and services residential mortgage loans, for approximately $7.6 million in cash. As part of this transaction, a key employee of PCM was granted approximately $800,000 of the Company’s restricted stock. In March 2016, this key employee ended his service period and all remaining amortization expense on unvested stock in the amount of $555,000 was accelerated. Any grants for employees of PCM are accounted for as compensation and amortized to equity compensation expense over the vesting period. Dividends declared on the stock while unvested are recorded as a general and administrative expense. Dividends declared after the stock vests are recorded as a distribution. For the three and nine months ended September 30, 2016, $63,000 and $900,000 of amortization of the stock grants was recorded to equity compensation expense, respectively. For the three and nine months ended September 30, 2015, $177,000 and $528,000 of amortization of the stock grants was recorded to equity compensation expense, respectively. For the three and nine months ended September 30, 2016, $38,000 and $115,000 of expense related to dividends on unvested shares was recorded to general and administrative expense on the Company’s consolidated statements of operations, respectively. For the three and nine months ended September 30, 2015, $50,000 and $136,000 of expense related to dividends on unvested shares was recorded to general and administrative expense on the Company’s consolidated statements of operations, respectively.

XML

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 15 - EARNINGS PER SHARE

On August 3, 2015, the Company's board of directors approved a one-for-four reverse stock split of its outstanding common stock which took effect after the close of business on August 31, 2015. Outstanding share and per-share amounts disclosed as of September 30, 2016 and for all other comparative periods provided have been retroactively adjusted to reflect the effects of the stock split.

The following table presents a reconciliation of basic and diluted earnings per share for the periods presented as follows (in thousands, except share and per share amounts):

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Basic:
Net income (loss) allocable to common shares	$	(51,573	)	$	6,778	$	(43,436	)	$	(14,831	)
Weighted average number of shares outstanding	30,528,368			32,515,226		30,513,131			32,726,194
Basic net income (loss) per share	$	(1.69	)	$	0.21	$	(1.42	)	$	(0.45	)
Diluted:
Net income (loss) allocable to common shares	$	(51,573	)	$	6,778	$	(43,436	)	$	(14,831	)
Weighted average number of shares outstanding	30,528,368			32,515,226		30,513,131			32,726,194
Additional shares due to assumed conversion of dilutive instruments	—			435,991		—			—
Adjusted weighted-average number of common shares outstanding	30,528,368			32,951,217		30,513,131			32,726,194
Diluted net income (loss) per share	$	(1.69	)	$	0.21	$	(1.42	)	$	(0.45	)

Potentially dilutive shares consisting of 294,462 and 352,225 shares of restricted stock are not included in the calculation of diluted net income (loss) per share for the three and nine months ended September 30, 2016, respectively, because the effect was anti-dilutive. Potentially dilutive shares consisting of 9,002,864 shares issuable in connection with the potential conversion of the Company's 6.0% and 8.0% Convertible Senior Notes (see Note 12) for both the three and nine months ended September 30, 2016 were not included in the calculation of diluted net income (loss) per share because the effect would be anti-dilutive.

Potentially dilutive shares consisting of zero and 349,249 shares of restricted stock were not included in the calculation of diluted net (loss) per share for the three and nine months ended September 30, 2015, respectively, because the effect was anti-dilutive. Potentially dilutive shares consisting of 9,002,864 shares issuable in connection with the potential conversion of the Company's 6.0% and 8.0% Convertible Senior Notes for both the three and nine months ended September 30, 2015 were not included in the calculation of diluted net loss per share because the effect was anti-dilutive.

XML

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

NOTE 16 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table presents the changes in each component of accumulated other comprehensive income (loss) for the nine months ended September 30, 2016 (dollars in thousands):

	Net unrealized (loss) gain on derivatives			Net unrealized (loss) gain on securities, available-for-sale			Foreign Currency Translation		Accumulated other comprehensive income (loss)
January 1, 2016 (as adjusted)	$	(131	)	$	(835	)	$	—	$	(966	)
Other comprehensive gain (loss) before reclassifications	118			8,382			—		8,500
Amounts reclassified from accumulated other comprehensive income	(29		)	(596		)	—		(625		)
September 30, 2016	$	(42	)	$	6,951		$	—	$	6,909

XML

RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 17 - RELATED PARTY TRANSACTIONS

Relationship with Resource America and Certain of its Subsidiaries

Relationship with Resource America.  On September 19, 2013, the audit committee of the board of directors of Resource America concluded that Resource America should consolidate the financial statements of the Company, which was previously treated as an unconsolidated VIE. Resource America's audit committee reached this conclusion after consultations with the Office of the Chief Accountant of the Securities and Exchange Commission (the “Commission”) following comments received from the staff of the Division of Corporation Finance of the Commission and the audit committee's discussion with the Company's management and its independent registered public accounting firm. Resource America's audit committee noted that consolidation of the Company was not expected to materially affect Resource America's previously reported net income attributable to common shareholders. In December 2015, Resource America elected to early adopt consolidation guidance issued by the FASB in February 2015 (see Note 2) and as a result was required to reevaluate whether or not the Company should be consolidated into Resource America’s financial statements. It was determined that the Company is no longer a VIE and Resource America will no longer consolidate the Company’s financial statements. On September 8, 2016, Resource America was acquired by C-III, a leading commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, CDO management, principal investment, investment sales and multifamily property management. As part of the transaction, C-III took over control of the Company's Manager with respect to the management agreement (described below) from Resource America and became beneficial owner of 715,396 shares of the Company's common equity (2.3% of the Company's outstanding shares) held by Resource America as of September 30, 2016. On May 22, 2016, Resource America entered into a letter agreement with the Company pursuant to which the Company irrevocably waived its right to terminate the management agreement as a result of a “Change of Control” (as defined in the management agreement) resulting from the merger. At the close of the transaction on September 8, 2016, Resource America paid a $1.5 million fee to the Company for the waiver which was recorded in other income (expense) on the consolidated statements of operations.

The Company is managed by the Manager, which is a wholly-owned subsidiary of Resource America, pursuant to a management agreement that provides for both base and incentive management fees.  For the three and nine months ended September 30, 2016 the Manager earned base management fees of approximately $2.9 million and $9.8 million, respectively. For the three and nine months ended September 30, 2015, the Manager earned base management fees of approximately $3.1 million and $9.8 million, respectively. No incentive management fees were earned for the three and nine months ended September 30, 2016 or 2015.  The Company also reimburses the Manager and Resource America for expenses, including the expenses of employees of Resource America who perform legal, accounting, due diligence and other services that outside professionals or consultants would otherwise perform, and for the wages, salaries and benefits of several Resource America personnel dedicated to the Company’s operations.  The Company also reimburses Resource America for additional costs incurred related to the Company's life care business, Long Term Care Conversion Funding, established for the purpose of originating and acquiring life settlement contracts. The initial agreement, authorized in December 2012, provided for an annual fee of $550,000, with a two-year term. In March 2015, the agreement was amended to extend the term for an additional two years terminating in December 2016. This fee is paid quarterly. For the three and nine months ended September 30, 2016 the Company paid the Manager $1.4 million and $4.0 million, respectively, as expense reimbursements. For the three and nine months ended September 30, 2015 the Company paid the Manager $1.3 million and $4.0 million, respectively, as expense reimbursements.

On November 24, 2010, the Company entered into an Investment Management Agreement with Resource Capital Markets, Inc. (“RCM”), a wholly-owned subsidiary of Resource America.  The initial agreement provided that: (a) RCM may invest up to $5.0 million of the Company’s funds, with the investable amount being adjusted by portfolio gains (losses) and collections, and offset by expenses, taxes and realized management fees, and (b) RCM can earn a management fee in any year that the net profits earned exceed a preferred return. On June 17, 2011, the Company entered into a revised Investment Management Agreement with RCM which provided an additional $8.0 million of the Company’s funds.  The management fee is 20% of the amount by which the net profits exceed the preferred return.  During the three and nine months ended September 30, 2016 and 2015, RCM earned no management fees. The portfolio began a partial liquidation during the year ended December 31, 2013 that has resulted in the outstanding portfolio balance being significantly decreased. The Company holds $3.7 million in fair market value of trading securities as of September 30, 2016, no change from $3.7 million at fair market value as of December 31, 2015.  The Company also reimburses RCM for expenses paid on the Company's behalf. For the three and nine months ended September 30, 2016, the Company paid RCM $1,000 and $9,000, respectively, as expense reimbursements. For the three and nine months ended September 30, 2015 the Company paid RCM $21,000 and $118,000, respectively, as expense reimbursements.

At September 30, 2016, the Company was indebted to the Manager for $1.5 million, comprised of base management fees of $948,000 and expense reimbursements of $600,000.  At December 31, 2015, the Company was indebted to the Manager for $2.5 million, comprised of base management fees of $978,000 and expense reimbursements of $1.6 million. At September 30, 2016, the Company was indebted to RCM under the Company’s Investment Management Agreement for $77,000, comprised entirely of expense reimbursements.  At December 31, 2015, the Company was indebted to RCM under the Company’s Investment Management Agreement for $152,000, comprised entirely of expense reimbursements. The Company's base management fee payable as well as expense reimbursements payable are recorded in accounts payable and other liabilities on the consolidated balance sheets.

During the year ended December 31, 2013, the Company, through one of its subsidiaries, Northport TRS, LLC, began originating middle-market loans. Resource America was paid origination fees in connection with the Company’s middle-market lending operations, which capped out at 2% of the loan balance for any loan originated. The Company was indebted to RCM for $0 and $93,000 as of September 30, 2016 and December 31, 2015, respectively, for the middle-market operations. As a result of its sale of Northport TRS, LLC, the Company has sold substantially all of its direct origination middle market loans and one syndicated loan, with an aggregate par balance of $257.3 million.

On November 7, 2013, the Company, through a wholly-owned subsidiary, purchased all of the membership interests in Elevation Home Loans, LLC, a start-up residential mortgage company, from a person who subsequently became an employee of Resource America for $830,000, paid in the form of 34,165 shares of restricted Company common stock.  The restricted stock vests in full on November 7, 2016, and includes dividend equivalent rights. Elevation Home Loans, LLC was liquidated in 2016.

In May 2016, the Company made an €12.5 million investment in Harvest CLO XV, a European CLO with a total par value of €413.0 million with an unrelated third-party collateral manager. In connection with this transaction, the Company paid a $2.3 million structuring and placement fee to Resource America.

As of September 30, 2016, the Company retained equity in eight securitizations, which were structured for the Company by the Manager.  Under the Management Agreement, the Manager was not separately compensated by the Company for executing these transactions and is not separately compensated for managing the securitizations' entities and their assets. The Company has liquidated two of these securitizations, one in October 2014 and another in June 2015. On January 1, 2016, the Company adopted new consolidation guidance on variable interest entities and, as a result, two of the Company's remaining securitizations were deconsolidated.

Relationship with LEAF Commercial Capital.LCC originated and managed equipment leases and notes on behalf of the Company. On March 5, 2010, the Company entered into agreements with Lease Equity Appreciation Fund II, L.P. (“LEAF II”) (an equipment leasing partnership sponsored by LEAF Financial and of which a LEAF Financial subsidiary is the general partner), pursuant to which the Company provided and funded an $8.0 million credit facility to LEAF II.  The credit facility initially had a one year term with interest at 12% per year, payable quarterly, and was secured by all the assets of LEAF II, including its entire ownership interest in LEAF II Receivables Funding.  The Company received a 1% origination fee in connection with establishing the facility.  The facility originally matured on March 3, 2011 and was extended until September 3, 2011 with a 1% extension fee paid on the outstanding loan balance.  On June 3, 2011, the Company entered into an amendment to extend the maturity to February 15, 2012 and to decrease the interest rate from 12% to 10% per annum resulting in a troubled-debt restructuring under current accounting guidance.  On February 15, 2012, the credit facility was further amended to extend the maturity to February 15, 2013 with a 1% extension fee accrued and added to the amount outstanding.  On January 11, 2013, the Company entered into another amendment to extend the maturity to February 15, 2014 with an additional 1% extension fee accrued and added to the amount outstanding. On December 17, 2013, the Company entered into another amendment to extend the maturity to February 15, 2015. At the end of 2014, the Company recorded a provision for loan loss on this loan of $1.3 million before extinguishing the loan and bringing direct financing leases in the amount of $2.1 million on the Company's books in lieu of the loan receivable. There was no provision taken during the three and nine months ended September 30, 2016. During the three and nine months ended September 30, 2015, the Company recorded a partial recovery of the previously taken provision in the amount $0 and $216,000, respectively. As of September 30, 2016, the Company held $571,000 of direct financing leases, net of reserves.

On November 16, 2011, the Company, together with LEAF Financial and LCC, entered into the SPA with Eos (see Note 3). The Company’s resulting interest is accounted for under the equity method.  For the three and nine months ended September 30, 2016 the Company recorded income of $415,000 and $2.8 million, respectively, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. For the three and nine months ended September 30, 2015 the Company recorded income of $961,000 and $1.4 million, respectively, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations.  The Company’s investment in LCC was $44.8 million and $42.0 million as of September 30, 2016 and December 31, 2015, respectively.

Relationship with CVC Credit Partners.On April 17, 2012, Apidos Capital Management (“ACM”), a former subsidiary of Resource America, was sold to CVC Credit Partners, L.P. ("CVC Credit Partners"), a joint venture entity in which Resource America owns a 24% interest. CVC Credit Partners manages internally and externally originated bank loan assets on the Company’s behalf.  Also, on February 24, 2011, a subsidiary of the Company purchased 100% of the ownership interests in Churchill Pacific Asset Management LLC ("CPAM") from Churchill Financial Holdings LLC for $22.5 million.  CPAM subsequently changed its name to RCAM. Through RCAM, the Company was initially entitled to collect senior, subordinated and incentive fees related to five CLOs holding approximately $1.9 billion in assets managed by RCAM.  RCAM is assisted by CVC Credit Partners in managing these CLOs.  CVC Credit Partners is entitled to 10% of all subordinated fees and 50% of the incentive fees received by RCAM.  For the three and nine months ended September 30, 2016 CVC Credit Partners earned subordinated and incentive fees of $254,000 and $561,000, respectively. For the three and nine months ended September 30, 2015 CVC Credit Partners earned subordinated and incentive fees of $173,000 and $631,000, respectively. In October 2012, the Company purchased 66.6% of the preferred equity in one of the RCAM CLOs. In May 2013, the Company purchased additional equity in this CLO, increasing its ownership percentage to 68.3%. In 2013 two of the five CLOs were called and the notes were paid down in full. In January 2016 another RCAM-managed CLO was called and $2.4 million of impairment, on a pre-tax basis, was recorded in depreciation and amortization on the Company's consolidated statements of operations on the related intangible asset as of December 31, 2015. In September 2016, another RCAM-managed CLO was called and $1.5 million of impairment, on a pre-tax basis, was recorded in impairment losses on the Company's consolidated statements of operations on the related intangible asset during the three months ended September, 30 2016. In September 2016, the Company recorded impairment on the remaining CLO of $2.2 million, on a pre-tax basis, on the related intangible asset for its anticipated redemption in early 2017.

In May, June and July 2013, the Company invested a total of $15.0 million in CVC Global Credit Opportunities Fund, L.P. which generally invests in assets through the Master Fund. The fund pays the investment manager a quarterly management fee in advance calculated at the rate of 1.5% annually based on the balance of each limited partner's capital account. The Company's management fee was waived upon entering the agreement because the Company is a related party of CVC Credit Partners. For the three and nine months ended September 30, 2015, the Company recorded a loss of $628,000 and earnings of $293,000, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. In March 2015, the Company elected to withdraw $5.0 million from the fund. In July 2015, a $625,000 withdrawal was requested and received. In October 2015, another $4.0 million withdrawal was requested and received. In December 2015, the Company elected to withdraw the remaining $8.6 million from the fund. The Company retained no investment in the fund as of December 31, 2015.

Relationship with Resource Real Estate.Resource Real Estate, a subsidiary of Resource America, originates, finances and manages the Company’s commercial real estate loan portfolio.  The Company reimburses Resource Real Estate for loan origination costs associated with all loans originated.  The Company had a receivable in the amount of $0 and $2,500 due from Resource Real Estate for loan origination costs in connection with the Company’s commercial real estate loan portfolio as of September 30, 2016 and December 31, 2015, respectively.

On December 1, 2009, the Company purchased a membership interest in RRE VIP Borrower, LLC (an unconsolidated VIE that held an interest in a real estate joint venture) from Resource America for $2.1 million, its book value.  RREM was asset manager of the venture and received a monthly asset management fee equal to 1.0% of the combined investment calculated as of the last calendar day of the month. There were no fees incurred for the three and nine months ended September 30, 2016 and 2015, as the last property associated with the joint venture was sold in July 2014. For the three and nine months ended September 30, 2016 the Company recorded income of $0 and $35,000, respectively, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. For the three and nine months ended September 30, 2015 the Company recorded income of $0 and $46,000, respectively, which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. The income recorded in 2016 and 2015 was related to insurance premium refunds and the liquidation of bank accounts with respect to the underlying sold properties of the portfolio.

On January 15, 2010, the Company loaned $2.0 million to Resource Capital Partners, Inc. (“RCP”), a wholly-owned subsidiary of Resource America, so that it could acquire a 5.0% limited partnership interest in Resource Real Estate Opportunity Fund, L.P. (“RRE Opportunity Fund”).  RCP is the general partner of the RRE Opportunity Fund.  The loan was secured by RCP’s partnership interest in the RRE Opportunity Fund.  The promissory note bore interest at a fixed rate of 8.0% per annum on the unpaid principal balance.  In the event of default, interest accrued at a rate of 5.0% in excess of the fixed rate.  Interest was payable quarterly.  Mandatory principal payments were required to the extent distributable cash or other proceeds from RRE Opportunity Fund represent a return of RCP’s capital.  The loan had an original maturity date of January 14, 2015, with twoone-year extensions. RCP exercised the first option, extending the maturity to January 14, 2016. The loan was paid in full in April 2015.

The Company has closed the following four real estate securitization transactions, which provide financing for commercial real estate loans: RCC CRE Notes 2013, a $307.8 million securitization in December 2013; RCC 2014-CRE2, a $353.9 million securitization on July 30, 2014; RCC 2015-CRE3, a $346.2 million securitization on February 24, 2015; and RCC 2015-CRE4, a $312.9 million securitization on August 18, 2015. Resource Real Estate serves as special servicer for each transaction. With respect to each specialty service mortgage loan, Resource Real Estate receives an amount equal to the product of (a) the special servicing fee rate, 0.25% per annum, and (b) the outstanding principal balance of such specialty service mortgage loan. The servicing fee is payable monthly, on an asset-by-asset basis. The Company utilizes the brokerage services of Resource Securities, Inc. (“Resource Securities”), a wholly-owned broker-dealer subsidiary of Resource America, on a limited basis to conduct some of its asset trades. The Company paid Resource Securities placement agent fees in connection with each transaction as follows: $205,000, $175,000, $100,000, and $85,000, respectively.

In July 2014, the Company formed RCM Global Manager to invest in RCM Global, an entity formed to hold a portfolio of structured product securities. The Company contributed $15.0 million for a 63.8% membership interest in RCM Global. A five member board manages RCM Global, and all actions, including purchases and sales, must be approved by no less than three of the five members of the board. The portion of RCM Global that the Company does not own is presented as non-controlling interest as of September 30, 2015 and for the periods presented for the three and nine months ended September 30, 2015 in the Company's consolidated financial statement. All intercompany accounts and transactions have been eliminated in consolidation. In March and June 2015, the Company requested and received a proportional, in-kind distribution in certain securities held by RCM Global. The distribution of and subsequent sale of those securities by the Company through its subsidiary, RCC Residential, resulted in the realization of $5.0 million of net gain for the year ended December 31, 2015. During the nine months ended September 30, 2016 RCC Residential received a cash distribution in the amount of $620,000. The Company's ownership interest was 28.6% as of September 30, 2016. On January 1, 2016, the Company adopted new consolidation guidance on variable interest entities and, as a result, the Company deconsolidated RCM Global and now accounts for this investment as an investment in unconsolidated entities on the consolidated balance sheet (see Note 2). For the three and nine months ended September 30, 2016, the Company recorded losses of $560,000 and $160,000 which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations, respectively.

In September 2014, the Company contributed $17.5 million to Pelium Capital for an initial ownership interest of 80.4%. Pelium Capital is a specialized credit opportunity fund managed by Resource America. The Company funded its final commitment of $2.5 million, as of February 1, 2015. The Company will receive 10% of the carried interest in the partnership for the first five years, and can increase its interest to 20% if the Company's capital contributions aggregate $40.0 million. Resource America contributed securities valued at $2.8 million to the formation of Pelium Capital. The portion of the fund that the Company does not own is presented as non-controlling interests as of the dates and for the periods presented in the Company's consolidated financial statements. Pelium Capital was determined not to be a VIE as there was sufficient equity at risk, the Company does not have disproportionate voting rights and Pelium Capital's partners have all of the following characteristics: (1) the power to direct the activities of Pelium; (2) the obligation to absorb losses; and (3) the right to receive residual returns. However, Pelium Capital was consolidated as a result of the Company's majority ownership and the Company's unilateral kick-out rights. The non-controlling interests in Pelium Capital are owned by Resource America and outside investors. All intercompany accounts and transactions were eliminated in consolidation as of December 31, 2015. The Company's ownership interest in Pelium Capital was 80.2% as of September 30, 2016. On January 1, 2016, the Company adopted new consolidation guidance on variable interest entities and, as a result, the Company deconsolidated Pelium Capital and now accounts for this investment as an investment in unconsolidated entities on the consolidated balance sheet (see Note 2). For the three and nine months ended September 30, 2016, the Company recorded earnings of $1.0 million and $2.8 million which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations, respectively.

On April 10, 2015, the Company entered into two first mortgage bridge loans in the amount of $2.5 million and $3.3 million with two funds sponsored by Resource America, Resource Real Estate Investors LP and Resource Real Estate Investors

II, LP. Each loan carried an interest rate of LIBOR plus 5.75% with a LIBOR floor of 0.25%. The loans had a maturity date of May 5, 2016, with two consecutive one-year options to extend upon the first maturity date. The loan in the amount of $2.5 million was repaid in full with interest on April 29, 2015. The second loan in the amount of $3.3 million was repaid in full with interest on July 31, 2015.

On June 24, 2015, the Company committed to invest up to $50.0 million in Pearlmark Mezz, a Delaware limited partnership. The contractual fund manager of the fund is Pearlmark Real Estate LLC ("Pearlmark"), a Delaware limited liability company that is 50% owned by Resource America. The Company will pay Pearlmark Mezz management fees of 1.0% on the unfunded committed capital and 1.5% on the invested capital. The Company is entitled to a management fee rebate of 25% for the first year of the fund. As of September 30, 2016, the Company is indebted for $268,000 for management fees, net of the rebate. Resource America has agreed that it will credit any such fees paid by the Company to Pearlmark against the base management fee that the Company pays to Resource America. The Company has invested an aggregate of $17.8 million in capital in Pearlmark Mezz. For the three and nine months ended September 30, 2016, the Company recorded earnings of $132,000 and $552,000 which was recorded in equity in earnings of unconsolidated subsidiaries on the consolidated statements of operations. As of September 30, 2016, the Company has an investment balance of $16.8 million and a 47.7% ownership interest in the fund.

Relationship with Law Firm.  Until 1996, Edward E. Cohen, a former director who was the Company’s Chairman from its inception until November 2009, was of counsel to Ledgewood, P.C. ("Ledgewood"), a law firm.  In addition, one of the Company’s former executive officers, Jeffrey F. Brotman, was employed by Ledgewood until 2007.  Mr. E. Cohen receives certain debt service payments from Ledgewood related to the termination of his affiliation with Ledgewood and its redemption of his interest in the firm.  Mr. Brotman also receives certain debt service payments from Ledgewood related to the termination of his affiliation with the firm.   For the three and nine months ended September 30, 2016 the Company paid Ledgewood $137,000 and $305,000, respectively, in connection with legal services rendered to the Company. For the three and nine months ended September 30, 2015 the Company paid Ledgewood $13,000 and $348,000, respectively, in connection with legal services rendered to the Company. On September 8, 2016, as part of the merger with C-III, Mr. E. Cohen and Mr. Brotman stepped down from their positions in the Company, and, as a result, Ledgewood is no longer considered a related party of the Company.

XML

DISTRIBUTIONS

9 Months Ended

Sep. 30, 2016

DISTRIBUTIONS [Abstract]

DISTRIBUTIONS

NOTE 18 - DISTRIBUTIONS

For the quarter ended September 30, 2016, the Company declared and subsequently paid a dividend of $0.42 per common share.

In order to qualify as a REIT, the Company must currently distribute at least 90% of its taxable income.  In addition, the Company must distribute 100% of its taxable income in order not to be subject to corporate federal income taxes on retained income.  The Company anticipates it will distribute substantially all of its taxable income to its stockholders.  Because taxable income differs from cash flow from operations due to non-cash revenues or expenses (such as provisions for loan and lease losses and depreciation), in certain circumstances, the Company may generate operating cash flow in excess of its distributions or, alternatively, may be required to borrow to make sufficient distribution payments.

The Company’s 2016 dividends are determined by the Company’s board of directors which also consider the composition of any dividends declared, including the option of paying a portion in cash and the balance in additional common shares.

The following tables present dividends declared (on a per share basis) for the first three quarters of 2016 and each of the quarters in 2015:

Common Stock
	Date Paid	Total Dividend Paid		Dividend Per Share
		(in thousands)
2016
March 31	April 28	$	13,073	$	0.42
June 30	July 28	$	13,051	$	0.42
September 30	October 28	$	13,012	$	0.42
2015
March 31	April 28	$	21,444	$	0.64
June 30	July 28	$	21,426	$	0.64
September 30	October 28	$	20,667	$	0.64
December 31	January 28, 2016	$	13,274	$	0.42

Preferred Stock
Series A						Series B					Series C
	Date Paid	Total Dividend Paid		Dividend Per Share		Date Paid	Total Dividend Paid		Dividend Per Share		Date Paid	Total Dividend Paid		Dividend Per Share
		(in thousands)					(in thousands)					(in thousands)
2016
March 31	May 2	$	568	$	0.531250	May 2	$	2,859	$	0.515625	May 2	$	2,588	$	0.539063
June 30	August 1	$	568	$	0.531250	August 1	$	2,859	$	0.515625	August 1	$	2,588	$	0.539063
September 30	October 31	$	568	$	0.531250	October 31	$	2,859	$	0.515625	October 31	$	2,588	$	0.539063
2015
March 31	April 30	$	568	$	0.531250	April 30	$	2,960	$	0.515625	April 30	$	2,588	$	0.539063
June 30	July 30	$	568	$	0.531250	July 30	$	2,960	$	0.515625	July 30	$	2,588	$	0.539063
September 30	October 30	$	568	$	0.531250	October 30	$	2,960	$	0.515625	October 30	$	2,588	$	0.539063
December 31	February 1, 2016	$	568	$	0.531250	February 1, 2016	$	2,960	$	0.515625	February 1, 2016	$	2,588	$	0.539063

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 19 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):

	Level 1		Level 2		Level 3		Total
As of September 30, 2016:
Assets:
Investment securities, trading	$	—	$	—	$	3,747	$	3,747
Investment securities available-for-sale	—		—		236,705		236,705
Loans held for sale	—		138,209		52,224		190,433
Derivatives	—		165		3,887		4,052
Total assets at fair value	$	—	$	138,374	$	296,563	$	434,937
Liabilities:
Derivatives	$	—	$	1,819	$	339	$	2,158
Total liabilities at fair value	$	—	$	1,819	$	339	$	2,158
As of December 31, 2015:
Assets:
Investment securities, trading	$	—	$	—	$	25,550	$	25,550
Investment securities available-for-sale	—		4,451		203,637		208,088
Loans held for sale	—		66,588		29,358		95,946
Derivatives	—		826		2,620		3,446
Total assets at fair value	$	—	$	71,865	$	261,165	$	333,030
Liabilities:
Derivatives	$	—	$	—	$	3,941	$	3,941
Total liabilities at fair value	$	—	$	—	$	3,941	$	3,941

The Company's residential mortgage loan portfolio included in loans held for sale is comprised of both agency loans and non-agency jumbo loans. The fair values of the Company's agency loan portfolio are generally classified as Level 2 in the fair value hierarchy, as those values are determined based on quoted market prices for similar assets or upon other observable inputs. The fair values of the Company's jumbo loan portfolio are generally classified as Level 3 in the fair value hierarchy, as those values are based upon the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan including the value attributable to servicing rights and credit risk. Loans are adjusted for spread to agency mortgage back securities with similar underlying mortgage loans, at rates ranging between 0.5% and 7.3%.

The fair value of interest rate lock commitments ("IRLCs") is estimated as the fair value of the of the underlying mortgage loans to be sold, which is based on quoted mortgage-backed securities ("MBSs") prices, plus the estimated fair value of the mortgage servicing rights, less the price committed to the borrower or mortgage lender and direct origination costs, adjusted for the probability that the mortgage will fund ("pull-through" rate). The estimated pull-through rate is based on the Company's historical data. IRLCs are included in derivatives on the Company's consolidated balance sheets.

The average pull-through rate used in measuring the fair value of IRLCs as of September 30, 2016 was 83.6% for assets and 90.5% for liabilities. The pull-through percentage is considered a significant unobservable input and is estimated based on changes in pricing and actual borrower behavior using a historical analysis of loan closing data. Generally, a change in interest rates is accompanied by a directionally opposite change in the assumption used for the pull-through percentage, and the impact to fair value of a change in pull-through would be partially offset by the related change in price.

Forwards - residential mortgage loans fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market. The fair value of forward delivery commitments is primarily based upon the current agency mortgage-backed security market to-be-announced pricing specific to the loan program, delivery coupon and delivery date of the trade. Best effort sales commitments are also executed for certain loans at the time the borrower commitment is made. These best effort sales commitments are valued using the committed price to the counterparty against the current market price of the interest rate lock commitment or mortgage loan held for sale. Forwards are included in derivatives on the Company's consolidated balance sheets.

As part of the origination of a certain middle market loan, the Company received warrants as consideration at the loan's origination. The fair value of the warrants at December 31, 2015 was $1.1 million which was calculated by performing a Black-Scholes analysis. The significant unobservable inputs were a measure of 50.0% for the annual volatility over the term of the warrants and a market capitalization of $172.7 million. These warrants were settled in August 2016.

In accordance with guidance on fair value measurements and disclosures, the Company is not required to disclose quantitative information with respect to unobservable inputs contained in fair value measurements that are not developed by the Company. As a consequence, the Company has not disclosed such information associated with fair values obtained for investment securities, trading and investment securities available for sale from third-party pricing sources.

The following table presents additional information about assets that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs (in thousands):

	CMBS			ABS			Structured Finance Securities			Loans Held for Sale			Warrants			Interest Rate Lock Commitments			Forwards - Residential Mortgage Loans			RMBS		Total
Balance, January 1, 2016	$	159,424		$	44,213		$	25,550		$	29,358		$	1,051		$	1,224		$	345		$	—	$	261,165
Included in earnings (1)	(324		)	606			86			(390		)	(198		)	22,654			145			—		22,579
Purchases/Originations	5,138			44,819			—			123,471			—			—			—			—		173,428
Sales	—			(57,639		)	—			(97,791		)	—			—			—			—		(155,430		)
Paydowns	(25,554		)	(10,853		)	(227		)	(2,424		)	—			—			—			—		(39,058		)
Issuances	—			—			—			—			—			—			—			—		—
Settlements	—			(28,425		)	—			—			(853		)	(20,201		)	(280		)	—		(49,759		)
Capitalized Interest	—			12,552			190			—			—			—			—			—		12,742
Included in OCI	(1,146		)	(24,282		)	—			—			—			—			—			—		(25,428		)
Deconsolidation of VIEs	(55,776		)	172,154			(21,852		)	—			—			—			—			—		94,526
Transfers into Level 3 (2)	—			—			—						—			—			—			1,798		1,798
Balance, September 30, 2016	$	81,762		$	153,145		$	3,747		$	52,224		$	—		$	3,677		$	210		$	1,798	$	296,563

(1) Structured finance securities, loans held for sale, interest rate lock commitments, and forwards on residential mortgage loans include $86,000, $(33,000), $0, and $0, respectively, in earnings attributable to the change in unrealized gains or (losses) relating to assets still held at the reporting date for the nine months endedSeptember 30, 2016.

The following table presents additional information about liabilities that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs (in thousands):

	Interest Rate Swaps			Forwards - Residential Mortgage Loans			Interest Rate Lock Commitments			Total
Balance, January 1, 2016	$	3,459		$	479		$	3		$	3,941
Included in earnings	50			249			43			342
Settlements	—			(393		)	(42		)	(435		)
Unrealized gains - included in accumulated other comprehensive income	(3,509		)	—			—			(3,509		)
Balance, September 30, 2016	$	—		$	335		$	4		$	339

The following table summarizes the financial assets and liabilities measured at fair value on a nonrecurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):    

	Level 1		Level 2		Level 3		Total
As of September 30, 2016:
Assets:
Loans held for sale	$	—	$	2,557	$	4,625	$	7,182
Impaired loans	—		—		30,074		30,074
Mortgage servicing rights (1)	—		—		25,284		25,284
Total assets at fair value	$	—	$	2,557	$	59,983	$	62,540
As of December 31, 2015:
Assets:
Loans held for sale	$	—	$	1,279	$	153	$	1,432
Impaired loans	—		262		129,433		129,695
Total assets at fair value	$	—	$	1,541	$	129,586	$	131,127

(1) See Note 11 for a description of the valuation techniques and key assumption types to the calculation of the fair value of mortgage servicing rights.

Loans held for sale consist of middle market loans identified for sale.  The fair value of Level 2 middle market loans held for sale are based on quoted market prices for similar assets or upon other observable inputs. The fair value of Level 3 middle market loans held for sale may be determined using a market or income approach methodology, both of which may require significant judgment or estimation for factors such as EBITDA multiples, market capitalization rates or discount rates, depending on the methodology used. The following unobservable input was used in the determination of fair value with respect to Level 3 middle market loans at September 30, 2016: EBITDA multiples ranged from 3.5x - 4.5x.

 Impaired loans consist of CRE loans for which an impairment analysis was conducted during the period. For the Company’s CRE loans for which there is no primary market, fair value is measured using a discounted cash flow analysis, appraisal or and other valuation technique; and these loans are classified as nonrecurring Level 3.

For both the three and nine months ended September 30, 2016 there were $8.1 million of nonrecurring fair value losses for specifically impaired loans. The amounts of nonrecurring fair value losses for specifically impaired loans for the three and nine months ended September 30, 2015 were $920,000 and $42.4 million, respectively. The amounts of nonrecurring fair value losses for loans held for sale for the three and nine months ended September 30, 2016 were $9.6 million and $21.8 million, respectively. The amounts of nonrecurring fair value losses for loans held for sale for the three and nine months ended September 30, 2015 were $35,000 and $841,000, respectively. Fair value was determined using an appraisal as a practical expedient to fair value.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value.  The fair values of the Company's short-term financial instruments such as cash and cash equivalents, restricted cash, principal paydown receivable, interest receivable, distribution payable, accrued interest expense, repurchase agreements and the secured revolving credit agreement approximate their carrying value on the consolidated balance sheets.  The fair values of the Company’s investment securities, trading are reported in Note 5.  The fair values of the Company’s investment securities available-for-sale are reported in Note 6.  The fair values of the Company’s derivative instruments are reported in Note 20.

The fair value of the Company’s Level 2 loans held-for-investment are primarily measured using a third-party pricing service.  The fair value of the Company’s Level 3 loans held-for-investment are measured by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

CDO notes are valued using dealer quotes, typically the dealer who underwrote the CDO in which the notes are held.

Junior subordinated notes are estimated by discounted cash flows with discount rates of 13.14% and 13.15% and used in the evaluation of RCT I and RCT II.

The fair value of the convertible notes was determined using a discounted cash flow model that discounts the expected future cash flows using current interest rates on similar debts that do not have a conversion option. The 6.0% Convertible Senior Notes are discounted at a rate of 7.00% and the 8.0% Convertible Senior Notes are discounted at a rate of 8.60%. The fair value of the CRE portfolio was determined using a discounted cash flow model that discounts the expected future cash flows at current rates at which similar loans would be made to borrowers with similar credit ratings and with the same remaining maturities. Discount rates used range between 15%-25%.

Repurchase agreements and the senior secured revolving credit agreement are variable rate debt instruments indexed to LIBOR that reset periodically and, as a result, their carrying value approximates their fair value.

The fair values of the Company’s remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported in the following table (in thousands):

			Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2016:
Loans held-for-investment	$	1,406,581	$	1,410,911	$	—	$	50,933	$	1,359,978
CDO notes	$	528,971	$	524,864	$	—	$	—	$	524,864
Junior subordinated notes	$	49,586	$	25,372	$	—	$	—	$	25,372
Convertible notes	$	207,588	$	215,000	$	—	$	—	$	215,000
Repurchase agreements	$	613,127	$	616,575	$	—	$	—	$	616,575
Senior secured revolving credit agreement	$	—	$	—	$	—	$	—	$	—
As of December 31, 2015:
Loans held-for-investment	$	2,160,751	$	2,150,061	$	—	$	222,100	$	1,927,961
CDO notes	$	1,032,581	$	923,817	$	—	$	—	$	923,817
Junior subordinated notes	$	51,413	$	17,907	$	—	$	—	$	17,907
Convertible notes	$	205,484	$	205,484	$	—	$	—	$	205,484
Repurchase agreements	$	418,836	$	418,836	$	—	$	—	$	418,836
Senior secured revolving credit agreement	$	186,974	$	186,974	$	—	$	—	$	186,974

XML

MARKET RISK AND DERIVATIVE INSTRUMENTS

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

MARKET RISK AND DERIVATIVE INSTRUMENTS

NOTE 20 - MARKET RISK AND DERIVATIVE INSTRUMENTS

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." When deemed appropriate, the Company uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are interest rate risk and foreign currency exchange rate risk.

The Company may hold various derivatives in the ordinary course of business, including warrants, interest rate swaps, forward contracts, options and IRLCs. Warrants are securities that give the holder the right, but not the obligation, to purchase securities from an issuer at a specific price and within a specified time period. All warrants held by the Company had been settled as of September 30, 2016. Options are contracts sold by one party to another that give the buyer the right, but not the obligation, to buy or sell a financial asset at an agreed-upon price during a certain period of time or on a specific date. Interest rate swap agreements are contracts between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. Forward contracts represent future commitments to either purchase or to deliver loans (residential mortgage lending), securities (TBA securities) or a quantity of a currency (foreign currency hedging) at a predetermined future date, at a predetermined rate or price and are used to manage interest rate risk on loan commitments and mortgage loans held for sale as well as currency risk with respect to the Company's long positions in foreign currency-denominated investment securities. Rate lock commitments represent commitments to fund loans at a specific rate and by a specified time and are used to mitigate risk of changes in interest rate in the Company's residential mortgage loan portfolio.

A significant market risk to the Company is interest rate risk.  Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond the Company’s control.  Changes in the general level of interest rates can affect net interest income, which is the difference between the interest income earned on interest-earning assets and the interest expense incurred in connection with the interest-bearing liabilities, by affecting the spread between the interest-earning assets and interest-bearing liabilities.  Changes in the level of interest rates also can affect the value of the Company’s interest-earning assets and the Company’s ability to realize gains from the sale of these assets.  A decline in the value of the Company’s interest-earning assets pledged as collateral for borrowings could result in the counterparties demanding additional collateral pledges or liquidation of some of the existing collateral to reduce borrowing levels.

The Company seeks to manage the extent to which net income changes as a function of changes in interest rates by matching adjustable-rate assets with variable-rate borrowings. The Company seeks to mitigate the potential impact on net income of periodic and lifetime coupon adjustment restrictions in its investment portfolio by entering into interest rate hedging agreements such as interest rate caps and interest rate swaps.

On January 1, 2016, RREF CDO 2006-1 and RREF CDO 2007-1 were deconsolidated in accordance with new guidance on consolidation of VIEs (see Note 2). The Company deconsolidated six interest rate swap contracts as part of the deconsolidation. The aggregate notional amount of these deconsolidated interest rate swaps was $99.9 million at January 1, 2016.

During April 2016, the Company requested and canceled its remaining interest rate swap contract through accumulated other comprehensive income (loss), to be amortized through earnings over the life of the remaining debt. As of September 30, 2016, the Company had no interest rate swap contracts outstanding. The Company had master netting agreements with Credit Suisse International and Wells Fargo at September 30, 2016. Regulations promulgated under the Dodd-Frank Act mandate that the Company clear certain new interest rate swap transactions through a central counterparty. Transactions that are centrally cleared result in the Company facing a clearing house, rather than a swap dealer, as counterparty.  Central clearing requires the Company to post collateral in the form of initial and variation margin to satisfy potential future obligations.  As of September 30, 2016, there were no centrally cleared interest rate swap contracts. The Company classifies its hedges as cash flow hedges, which are hedges that eliminate the risk of changes in the cash flows of a financial asset or liability. The Company records changes in fair value of derivatives designated and effective as cash flow hedges in other comprehensive income, and records changes in fair value of derivatives designated and ineffective as cash flow hedges in earnings.

At December 31, 2015, the Company had nine interest rate swap contracts outstanding whereby the Company paid an average fixed rate of 5.38% and received a variable rate equal to one-month LIBOR.  The aggregate notional amount of these contracts was $102.8 million at December 31, 2015.  The counterparties for the Company’s designated interest rate hedge contracts are Credit Suisse International and Wells Fargo with which the Company has master netting agreements.

The estimated fair value of the Company’s liability related to interest rate swaps was $0 and $3.5 million as of September 30, 2016 and December 31, 2015, respectively.  The Company had aggregate unrealized losses of $41,000 and $3.5 million on the interest rate swap agreements as of September 30, 2016 and December 31, 2015, respectively, which is recorded in accumulated other comprehensive income and a portion is recognized through earnings.  The amortization is reflected in interest expense in the Company’s consolidated statements of operations.

The Company is also exposed to foreign currency exchange risk, a form of risk that arises from the change in price of one currency against another. Substantially all of the Company's revenues are transacted in U.S. dollars; however, a significant amount of the Company's capital is exposed to other currencies, primarily the Euro and, to a lesser extent, the pound sterling. To address this market risk, the Company generally hedges foreign currency-denominated exposures (typically investments in debt instruments, including forecasted principal and interest payments) with foreign currency forward contracts. The Company classifies these hedges as fair value hedges, which are hedges that mitigate the risk of changes in the fair values of assets, liabilities, and certain types of firm commitments. The Company records changes in fair value of derivatives designated and effective as fair value hedges in earnings offset by corresponding changes in the fair values of the hedged items.

Forward contracts also contain an element of risk in that the counterparties may be unable to meet the terms of such agreements. In the event the parties to deliver commitments are unable to fulfill their obligations, the Company could potentially incur significant additional costs by replacing the positions at then current market rates. The Company manages its risk of exposure by limiting counterparties to those banks and institutions deemed appropriate by management. The Company does not expect any counterparty to default on its obligations and, therefore, the Company does not expect to incur any cost related to counterparty default.

The Company is exposed to interest rate risk on loans held for sale and IRLCs. As market interest rates increase or decrease, the fair value of mortgage loans held for sale and IRLCs will decline or increase accordingly. To offset this interest rate risk, the Company may enter into derivatives such as forward contracts to sell loans. The fair value of these forward sales contracts will change as market interest rates change, and the change in the value of these instruments is expected to largely, though not entirely, offset the change in fair value of loans held for sale and IRLCs. The objective of this activity is to minimize the exposure to losses on IRLCs and loans held for sale due to market interest rate fluctuations. The net effect of derivatives on earnings will depend on risk management activities and a variety of other factors, including market interest rate volatility, the amount of IRLCs that close, the ability to fill the forward contracts before expiration, and the time period required to close and sell loans.

During the warehousing phase of the Company’s investments in certain structured vehicles, the Company may enter into total return swaps to finance the Company’s exposure to assets that will ultimately be securitized. A total return swap is a swap agreement in which one party makes payments based on a set rate, while the other party makes payments based on the return of an underlying asset. Traditionally, the Company pays either an indexed or fixed interest payment to the warehousing lender and receives the net interest income and realized capital gains of the referenced portfolio of assets, generally loans, to be securitized that are owned and held by the warehousing lender. Upon the close of the warehousing period, the Company’s invested equity plus net interest and any capital gains realized during the warehousing period are returned to the Company. Additionally, upon the close of the securitization, the Company may purchase beneficial interests in the securitization at fair value.

The following tables present the fair value of the Company’s derivative financial instruments as well as their classification on the Company's consolidated balance sheets and on the consolidated statements of operations for the periods presented:

Fair Value of Derivative Instruments as of September 30, 2016

(in thousands)

	Asset Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements	$	260,970	Derivatives, at fair value	$	3,677
Forward contracts - residential mortgage lending	$	79,838	Derivatives, at fair value	$	237
Forward contracts - foreign currency, hedging (1)(2)	$	16,993	Derivatives, at fair value	$	137
Forward contracts - TBA securities	$	1,000	Derivatives, at fair value	$	1
	Liability Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements	$	2,636	Derivatives, at fair value	$	4
Forward contracts - residential mortgage lending	$	352,342	Derivatives, at fair value	$	1,897
Forward contracts - foreign currency, hedging (1)(3)	$	8,848	Derivatives, at fair value	$	104
Forward contracts - TBA securities	$	43,000	Derivatives, at fair value	$	153
Interest rate swap contracts, hedging	$	—	Accumulated other comprehensive (income) loss	$	41

(1) Foreign currency forward contracts are accounted for as fair value hedges.

(2) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts in an asset position was €15.1 million as of September 30, 2016.

(3) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts in a liability position was €7.9 million as of September 30, 2016.

Fair Value of Derivative Instruments as of December 31, 2015

(in thousands)

	Asset Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements (1)	$	105,385	Derivatives, at fair value	$	1,224
Forward contracts - residential mortgage lending	$	92,413	Derivatives, at fair value	$	345
Forward contracts - foreign currency, hedging (2)(3)	$	24,850	Derivatives, at fair value	$	727
Forward contracts - TBA securities	$	29,500	Derivatives, at fair value	$	99
Warrants (4)	$	553	Derivatives, at fair value	$	1,051
	Liability Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate swap contracts, hedging (5)	$	102,799	Derivatives, at fair value	$	3,459
Interest rate lock agreements (6)	$	505	Derivatives, at fair value	$	3
Forward contracts - residential mortgage lending	$	143,553	Derivatives, at fair value	$	479
Forward contracts - TBA securities	$	1,500	Derivatives, at fair value	$	—
Interest rate swap contracts, hedging	$	102,799	Accumulated other comprehensive (income) loss	$	(3,471	)

(1) The notional amount of the Company's IRLCs in an asset position is the total commitment weighted by the probability of closing the loan.

(2) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts was €22.9 million as of December 31, 2015.

(3) Foreign currency forward contracts are accounted for as fair value hedges.

(4) The notional amount of the Company's warrants is calculated by multiplying the number of shares available for purchase by the exercise price.

(5) Interest rate swap contracts are accounted for as cash flow hedges.

(6) The notional amount of the Company's IRLCs in a liability position is the total commitment weighted by the probability of closing the loan.

The Effect of Derivative Instruments on the Statements of Operations for the

Nine Months EndedSeptember 30, 2016 (in thousands)

	Derivatives
		Statement of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging		Interest expense	$	(95	)
Interest rate lock agreements		Gain (loss) on sale of residential mortgage loans	$	2,452
Forward contracts - residential mortgage lending		Gain (loss) on sale of residential mortgage loans	$	(1,577	)
Forward contracts - foreign currency, hedging		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	(733	)
Forward contracts - TBA securities		Gain (loss) on sale of residential mortgage loans	$	(1,070	)

(1) Negative values indicate a decrease to the associated consolidated statements of operations line items.

The Effect of Derivative Instruments on the Statements of Operations for the

Nine Months EndedSeptember 30, 2015 (in thousands)

	Derivatives
		Statement of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging		Interest expense	$	4,923
Interest rate swap contracts, hedging		Gain (loss) on sale of residential mortgage loans	$	(34	)
Interest rate lock agreements		Gain (loss) on sale of residential mortgage loans	$	1,128
Forward contracts - RMBS securities		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	(122	)
Forward contracts - residential mortgage lending		Gain (loss) on sale of residential mortgage loans	$	(197	)
Forward contracts - foreign currency, hedging		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	2,254
Options - U.S. Treasury futures		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	184
Forward contracts - TBA securities		Gain (loss) on sale of residential mortgage loans	$	415

(1) Negative values indicate a decrease to the associated consolidated statements of operations line items.

XML

OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2016

Offsetting [Abstract]

OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

NOTE 21 - OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The following table presents a summary of the Company's offsetting of derivative assets for the periods presented (in thousands):

							(iv) Gross Amounts Not Offset in the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Assets		(ii) Gross Amounts Offset in the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Assets Included in the Consolidated Balance Sheets		Financial Instruments		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
As of September 30, 2016:
Derivative hedging instruments, at fair value	$	4,052	$	—	$	4,052	$	—	$	—	$	4,052
Total	$	4,052	$	—	$	4,052	$	—	$	—	$	4,052
As of December 31, 2015:
Derivative hedging instruments, at fair value	$	3,446	$	—	$	3,446	$	—	$	—	$	3,446
Total	$	3,446	$	—	$	3,446	$	—	$	—	$	3,446

The following table presents a summary of the Company's offsetting of financial liabilities and derivative liabilities for the periods presented as follows (in thousands):

							(iv) Gross Amounts Not Offset in the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Liabilities		(ii) Gross Amounts Offset in the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Liabilities Included in the Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged (2)		(v) = (iii) - (iv) Net Amount
As of September 30, 2016:
Derivative hedging instruments, at fair value	$	2,158	$	—	$	2,158	$	—	$	—	$	2,158
Repurchase agreements and term facilities (4)	613,734		—		613,734		613,734		—		—
Total	$	615,892	$	—	$	615,892	$	613,734	$	—	$	2,158
As of December 31, 2015:
Derivative hedging instruments, at fair value (3)	$	3,941	$	—	$	3,941	$	—	$	500	$	3,441
Repurchase agreements and term facilities (4)	418,836		—		418,836		418,836		—		—
Total	$	422,777	$	—	$	422,777	$	418,836	$	500	$	3,441

(1) Amounts represent collateral pledged that is available to be offset against liability balances associated with term facilities, repurchase agreements and derivative transactions.

(2) Amounts represent amounts pledged as collateral against derivative transactions.

(3) The fair value of securities and/or cash and cash equivalents pledged against the Company's swaps was $500,000 at December 31, 2015.

(4) The combined fair value of securities and loans pledged against the Company's various term facilities and repurchase agreements was $942.3 million and $643.2 million at September 30, 2016 and December 31, 2015, respectively.

In the Company's consolidated balance sheets, all balances associated with repurchase agreement and derivatives transactions are presented on a gross basis.

Certain of the Company's repurchase agreements and derivative transactions are governed by underlying agreements that generally provide for a right of offset in the event of default or in the event of a bankruptcy of either party to the transaction.

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 22 - COMMITMENTS AND CONTINGENCIES

From time to time, the Company may become involved in litigation on various matters, including disputes arising out of loans in the Company's portfolio and agreements to purchase or sell assets. Given the nature of the Company's business activities, the Company considers these matters to be routine and in the ordinary conduct of its business. The resolution of these matters may result in adverse judgments, fines, penalties, injunctions and other relief against the Company as well as monetary payments or other agreements and obligations. Alternately, the Company may engage in settlement discussions on certain matters in order to avoid the additional costs of engaging in litigation.

In September 2015, Daren Levin filed a putative class action in the United States District Court for the Southern District of New York on behalf of all persons who purchased the Company's common stock between March 2, 2015 and August 4, 2015.  In November 2015, the Court appointed Douglas Drees as the lead plaintiff in the action, and thereafter entered a stipulation and order directing the lead plaintiff to file an amended complaint.  In February 2016, the lead plaintiff filed an amended complaint, alleging that the Company and certain of its officers and directors materially misrepresented certain risks of its commercial loan portfolio and its processes and controls for assessing the quality of its portfolio.  Based on these allegations, the amended complaint asserts claims for violation of the securities laws and seeks a variety of relief, including unspecified monetary damages as well as costs and attorneys’ fees.  In April 2016, the Company filed a motion to dismiss the amended complaint, which the court denied on October 5, 2016; and the discovery process is now expected to commence. The Company believes the amended complaint is without merit and intends to defend itself vigorously

                In December 2015, Josh Reaves filed a shareholder derivative suit in the Supreme Court of New York alleging that the Company's directors and certain officers breached their fiduciary duties by causing the Company to misrepresent certain risks in its commercial loan portfolio, by failing to employ adequate internal and financial controls and by failing to disclose the alleged internal control deficiencies.  The complaint purports to seek relief on behalf of the Company for unspecified damages as well as costs and attorneys’ fees.  The Company believes that the plaintiff, who failed to make a pre-suit demand on the board of directors, lacks standing to assert claims derivatively on the Company's behalf. In April 2016, the parties entered into a stipulation staying this proceeding until such time as the court ruled on the motion to dismiss the Levin action referenced above or certain other triggering events occur. That stay has now been lifted because the motion to dismiss the Levin action was denied.

PCM is a party to various claims and legal proceedings at various times. If PCM believes that a loss arising from any of these matters is probable and can be reasonably estimated, the loss is recorded. Currently, the only litigation involving PCM is related to claims for repurchases or indemnifications on loans that PCM has sold to investors.  Such claims are included in the reserve for mortgage repurchases and indemnifications. The reserve for mortgage repurchases and indemnifications was $5.2 million and $3.7 million as of September 30, 2016 and December 31, 2015, respectively.

Loans on one-to-four family residential mortgages originated by PCM are sold to various financial institutions and governmental entities with representations and warranties that are usual and customary for the industry. In the event of a breach of any of the representations and warranties related to a loan sold, PCM may be required to indemnify the investor against future losses, repurchase the mortgage loan or reimburse the investor for actual losses incurred (referred to as “make whole payments”).  The maximum exposure to credit loss in the event of an indemnification or loan repurchase would be the unpaid principal balance of the loan along with any premium paid by the investor when the loan was purchased, accrued but unpaid interest and other minor cost reimbursements.  This maximum exposure is at least partially mitigated by the value of the collateral underlying the mortgage loan.

On May 13, 2014, ResCap Liquidating Trust (“ResCap”), as successor to Residential Funding Company, LLC (“RFC”), filed an adversary proceeding against PCM in United States Bankruptcy Court of the Southern District of New York.  ResCap has sued some 90 sellers of residential mortgage loans for alleged breaches of warranty in various loans sold to RFC.  RFC contends that such breaches caused it damages from loan losses and liability to other transferee's of the loans. 

As of September 30, 2016, outstanding demands for indemnification, repurchase or make whole payments totaled approximately $20.5 million, of which a substantial portion related to loans sold to four investors prior to 2011.  In October 2016, PCM reached agreements to settle repurchase claims with two of the four investors, including those subject to the litigation initiated by ResCap in May 2014.  Pursuant to the settlement agreements, $2.1 million was fully reserved for at September 30, 2016.  These settlement agreements reduce the amount of outstanding demands against PCM for indemnification, repurchase or make whole payments to approximately $10.0 million.

The most significant remaining make whole demands against PCM are from Lehman Brothers Holding, Inc. (“LBHI”). On February 3, 2016, LBHI filed an adversary proceeding against PCM in United States Bankruptcy Court of the Southern District of New York.  LBHI has sued approximately 145 sellers of residential mortgage loans for alleged breaches of warranty in various loans sold to it.  LBHI contends that such breaches caused it damages from loan losses and liability to other transferees of the loans.  PCM intends to defend the action vigorously.

Unfunded commitments on the Company’s originated CRE loans generally fall into two categories: (1) pre-approved capital improvement projects; and (2) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, the Company would receive additional interest income on the advanced amount. Unfunded commitments on the Company's originated middle market loans fall into two categories: (1) revolving credit facility; and (2) unfunded commitments subject to the borrower meeting pre-specified criteria.

Except as previously discussed, the Company is unaware of any contingencies arising from such routine litigation that would require accrual or disclosure in the consolidated financial statements as of September 30, 2016.

XML

SEGMENT REPORTING

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 23 - SEGMENT REPORTING

The Company has five reportable operating segments: Commercial Real Estate Lending, Commercial Finance, Middle Market Lending, Residential Mortgage Lending, and Corporate & Other. The reportable operating segments are business units that offer different products and services. The Commercial Real Estate Lending operating segment includes the Company’s activities and operations related to commercial real estate loans, commercial real estate-related securities, and investments in real estate. The Commercial Finance operating segment includes the Company’s activities and operations related to bank loans, bank loan-related securities, and direct financing leases. The Middle Market Lending operating segment includes the Company’s activities and operations related to the origination and purchase of middle market loans. The Residential Mortgage Lending operating segment includes the Company’s activities and operations related to the origination and servicing of residential mortgage loans and the investment in RMBS. The Corporate & Other segment includes corporate level interest income, interest expense, and general and administrative expense.

The accounting policies of the operating segments are the same as those described in Note 2. The Company accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices. Relevant expenses incurred at the Corporate & Other segment are allocated to TRS subsidiaries based on their percentage of adjusted pre-tax net income (loss), which excludes unrealized gains and losses and provisions on loan and lease losses that are specific to the periods presented.

Summarized operating segment data are as follows (in thousands):

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Three Months Ended September 30, 2016
Interest income:
External customers	$	25,359		$	633		$	4,240		$	131		$	220		$	30,583
Other	6			724			27			—			12			769
Total interest income	25,365			1,357			4,267			131			232			31,352
Interest expense	8,573			—			467			—			5,080			14,120
Net interest income	16,792			1,357			3,800			131			(4,848		)	17,232
Gain on sale of mortgages	—			—			—			6,026			—			6,026
Amortization of MSRs	—			—			—			(1,491		)	—			(1,491		)
Other income from external customers	—			828			—			2,480			18			3,326
Total revenues	16,792			2,185			3,800			7,146			(4,830		)	25,093
Less:
Segment operating expenses	99			109			479			445			3,688			4,820
General and administrative	424			149			1,216			8,073			2,479			12,341
Depreciation and amortization	—			331			—			142			32			505
Impairment losses (4)	21,385			3,671			—			241			—			25,297
Provision (recovery) for loan and lease losses	7,997			(435		)	121			—			—			7,683
Equity in earnings of unconsolidated subsidiaries	(132		)	(900		)	—			—			—			(1,032		)
Other (income) expense	(32		)	29			9,631			(18		)	(793		)	8,817
Income (loss) before taxes	(12,949		)	(769		)	(7,647		)	(1,737		)	(10,236		)	(33,338		)
Income tax (expense) benefit	—			(1,236		)	—			(11,047		)	—			(12,283		)
Net income (loss)	$	(12,949	)	$	(2,005	)	$	(7,647	)	$	(12,784	)	$	(10,236	)	$	(45,621	)
	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Three Months Ended September 30, 2015
Interest income:
External customers	$	25,646		$	3,341		$	8,254		$	114		$	—		$	37,355
Other	12			803			2			144			7			968
Total interest income	25,658			4,144			8,256			258			7			38,323
Interest expense	9,004			368			1,480			433			5,045			16,330
Net interest income	16,654			3,776			6,776			(175		)	(5,038		)	21,993
Gain on sale of mortgages	—			—			—			3,154			—			3,154
Amortization of MSRs	—			—			—			(1,307		)	—			(1,307		)
Other income from external customers	—			1,033			—			1,055			17			2,105
Total revenues	16,654			4,809			6,776			2,727			(5,021		)	25,945
Less:
Segment operating expenses	50			272			1,240			71			1,361			2,994
General and administrative	633			569			978			6,317			1,726			10,223
Depreciation and amortization	—			454			—			142			32			628
Provision (recovery) for loan and lease losses	(46		)	179			901			—			—			1,034
Equity in earnings of unconsolidated subsidiaries	—			(333		)	—			—			(1		)	(334		)
Other (income) expense	6,352			(8,162		)	147			935			(798		)	(1,526		)
Income (loss) before taxes	9,665			11,830			3,510			(4,738		)	(7,341		)	12,926
Income tax (expense) benefit	—			(286		)	—			2,161			(79		)	1,796
Net income (loss)	$	9,665		$	11,544		$	3,510		$	(2,577	)	$	(7,420	)	$	14,722

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Nine Months Ended September 30, 2016:
Interest income:
External customers	$	75,600		$	1,999		$	24,620		$	329		$	333		$	102,881
Other	30			4,221			43			—			23			4,317
Total interest income	75,630			6,220			24,663			329			356			107,198
Interest expense	25,160			—			6,181			—			15,240			46,581
Net interest income	50,470			6,220			18,482			329			(14,884		)	60,617
Gain on sale of mortgages	—			—			—			15,607			—			15,607
Amortization of MSRs	—			—			—			(3,753		)	—			(3,753		)
Other income from external customers	—			2,162			—			2,809			54			5,025
Total revenues	50,470			8,382			18,482			14,992			(14,830		)	77,496
Less:
Segment operating expenses	233			679			2,990			1,354			9,382			14,638
General and administrative	1,681			847			3,229			21,262			6,334			33,353
Depreciation and amortization	—			1,132			4			413			101			1,650
Impairment losses (4)	21,385			3,671			—			241			—			25,297
Provision (recovery) for loan and lease losses	7,997			(358		)	12,180			—			—			19,819
Equity in earnings of unconsolidated subsidiaries	(585		)	(5,365		)	—			—			—			(5,950		)
Other (income) expense	(875		)	(947		)	9,828			(45		)	(1,758		)	6,203
Income (loss) before taxes	20,634			8,723			(9,749		)	(8,233		)	(28,889		)	(17,514		)
Income tax (expense) benefit	—			(973		)	—			(8,455		)	(130		)	(9,558		)
Net income (loss)	$	20,634		$	7,750		$	(9,749	)	$	(16,688	)	$	(29,019	)	$	(27,072	)

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending		Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Nine Months Ended September 30, 2015:
Interest income:
External customers	$	70,237		$	14,499		$	22,089	$	466		$	—		$	107,291
Other	82			2,607			4		145			81			2,919
Total interest income	70,319			17,106			22,093		611			81			110,210
Interest expense	23,933			2,225			3,682		721			14,773			45,334
Net interest income	46,386			14,881			18,411		(110		)	(14,692		)	64,876
Gain on sale of mortgages	—			—			—		11,594			—			11,594
Amortization of MSRs	—			—			—		(3,138		)	—			(3,138		)
Other income from external customers	—			3,398			—		4,506			51			7,955
Total revenues	46,386			18,279			18,411		12,852			(14,641		)	81,287
Less:
Segment operating expenses	56			940			2,444		1,615			6,838			11,893
General and administrative	1,382			2,238			2,262		18,009			5,750			29,641
Depreciation and amortization	—			1,346			1		372			95			1,814
Impairment losses	—			59			—		—			—			59
Provision (recovery) for loan and lease losses	38,025			1,696			4,223		(110		)	—			43,834
Equity in earnings of unconsolidated subsidiaries	(46		)	(1,655		)	—		—			(1		)	(1,702		)
Other (income) expense	7,200			(16,856		)	39		(4,618		)	(2,963		)	(17,198		)
Income (loss) before taxes	(231		)	30,511			9,442		(2,416		)	(24,360		)	12,946
Income tax (expense) benefit	(39		)	(1,782		)	—		(821		)	(327		)	(2,969		)
Net income (loss)	$	(270	)	$	28,729		$	9,442	$	(3,237	)	$	(24,687	)	$	9,977

(1) Includes interest expense for the Convertible Senior Notes of $4.4 million and $13.3 million for the three and nine months ended September 30, 2016 and $4.4 million and $13.0 million for the three and nine months ended September 30, 2015.

(2) Includes interest expense for the Unsecured Junior Subordinated Debentures of $636,000 and $1.9 million for the three and nine months ended September 30, 2016 and $610,000 and $1.8 million for the three and nine months ended September 30, 2015.

(3) Includes general corporate expenses not allocable to any particular operating segment.

(4) Includes impairment on intangible assets in the Commercial Finance segment of $3.7 million for the three and nine months ended September 30, 2016.

The following table presents total assets by segment for the periods indicated (in thousands):

Total Assets (2)	Commercial Real Estate Lending		Commercial Finance		Middle Market Lending		Residential Mortgage Lending		Corporate & Other (1)		Total
September 30, 2016	$	1,685,295	$	129,441	$	60,935	$	256,491	$	25,316	$	2,157,478
December 31, 2015	$	1,907,951	$	298,028	$	384,973	$	149,351	$	20,129	$	2,760,432

(1) Includes assets not allocable to any particular operating segment.

(2) On January 1, 2016, we adopted amendments to the consolidation accounting guidance (see Note 2) and deconsolidated two and three VIEs in the Commercial Real Estate Lending and Commercial Finance operating segments, respectively.

XML

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 24 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this report and determined that there have not been any events that have occurred that would require adjustments to or disclosures in the consolidated financial statements, except the following:

Subsequent to quarter end, the Company's board of directors approved the framework of a plan to streamline the Company's operations by focusing on CRE lending and exiting underperforming non-CRE businesses and investments. As part of this plan, the Company expects to discontinue operations in its middle market lending segment, its residential mortgage lending segment, and other non-real estate related portfolios. In addition, the Company intends to sell several of its legacy CRE loans and classify them as loans, held for sale as of December 31, 2016.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the accounting policies set forth in Note 2 included in our annual report on Form 10-K for the year ended December 31, 2015. The consolidated financial statements include the accounts of the Company. All inter-company transactions and balances have been eliminated.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of three months or less at the time of purchase. At September 30, 2016 and December 31, 2015, approximately $111.2 million and $74.3 million of the reported cash balances exceeded the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution, subjecting the Company to risk related to the uninsured balance. All of the Company's cash deposits are held at large, established financial institutions. 

Income Tax

Income Taxes

Due to changes in management’s focus regarding the non-CRE businesses, the Company determined that it no longer expects to have sufficient forecasted taxable income to completely realize the tax benefits of the gross deferred tax asset of $56.5 million (tax effected $21.9 million) as of September 30, 2016. The Company believes it will be able to utilize up to $15.4 million of the gross deferred tax asset prior to its expiration. Therefore, a gross valuation allowance of $41.1 million (tax effected expense of $16.3 million) has been recorded against the deferred tax asset as of September 30, 2016. Management will continue to assess its estimate of the amount of deferred tax asset that the Company expects to utilize. The net income tax expense recorded during the quarter ended September 30, 2016 was $12.3 million which consists of $4.0 million of tax benefits attributable to operating loss incurred during the quarter and a $16.3 million valuation allowance.

Recent Accounting Standards

Recent Accounting Standards

In August 2016, the FASB issued new guidance to reduce the diversity in practice around the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The guidance addresses the following eight specific cash flow issues : debt prepayments or extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); settlement of zero-coupon debt instruments or other debt instruments with insignificant coupon rates; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within that reporting period. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance.

In June 2016, the FASB issued guidance which will change how credit losses for most financial assets and certain other instruments that are measured at fair value through net income are determined. The new guidance will replace the current incurred loss approach with an expected loss model for instruments measured at amortized cost. For available-for-sale debt securities, the guidance requires recording allowances rather than reducing the carrying amount, as it is currently under the other-than-temporary impairment model. It also simplifies the accounting model for credit-impaired debt securities and loans. This guidance is effective for annual reporting periods beginning after December 15, 2019, and interim periods within that reporting period. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within that reporting period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance.

In March 2016, the FASB issued guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance.

In February 2016, the FASB issued guidance requiring lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting will remain largely unchanged. The guidance will also require new qualitative and quantitative disclosures to help financial statement users better understand the timing, amount and uncertainty of cash flows arising from leases. This guidance will be effective for reporting periods beginning on or after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this guidance and its impact on our consolidated financial statements.

In January 2016, the FASB issued guidance to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments in order to provide users of financial statements with more decision-useful information. The guidance requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.  It is effective for annual reporting periods, and the interim periods within those periods, beginning after December 15, 2017 and early adoption is permitted for certain provisions. The Company is currently evaluating the effect of adoption.

In September 2015, the FASB issued guidance that simplifies the accounting for adjustments made to provisional amounts recognized in a business combination, which are currently recognized on a retrospective basis. Under the new requirements, adjustments to provisional amounts will be recognized in the reporting period in which the adjustments are determined. The effects of changes in depreciation, amortization, or other income arising from changes to the provisional amounts, if any, are included in earnings of the reporting period in which the adjustments to the provisional amounts are determined. An entity is also required to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.  It is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued guidance that simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. It is effective for annual reporting periods beginning after December 15, 2015. The Company has early adopted the provisions of this guidance. Note 12, Borrowings, reflects the presentation of debt issuance costs as prescribed by this accounting standards update. Adoption did not have a material impact on the Company's consolidated financial statements.

In February 2015, the FASB issued guidance that requires an entity to evaluate whether it should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) modify the evaluation of whether limited partnerships and similar legal entities are VIEs; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related-party relationships; and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This guidance is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015.

On January 1, 2016, the Company adopted the above guidance as required.  As a result of its re-evaluation, the Company determined it was no longer the primary beneficiary of the following VIEs and, therefore, they were deconsolidated: RREF CDO 2006-1, RREF CDO 2007-1, Apidos Cinco CDO, Pelium Capital, and RCM Global.  As a result of these deconsolidations, the Company no longer reflects the underlying collateral (loans and securities) of those VIEs in its consolidated financial statements. Instead, the Company prospectively reflects in its consolidated balance sheet, its direct investments (the "retained investments") in the issued and outstanding securities of those VIEs. The Company'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 Company's retained investments in Pelium Capital and RCM Global are accounted for as equity method investments. The Company 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.  The reduction to retained earnings represents the effect of marking the investments to market value as of the date of the adoption.

The following table summarizes the net impact of the deconsolidation of the five VIEs upon adoption on January 1, 2016 (in thousands) net of eliminations:

	Total Deconsolidated VIEs			Retained Interest as of 1/1/2016		Net Impact on Deconsolidation
ASSETS:
Cash and cash equivalents	$	472		$	—	$	472
Restricted cash	17,076			—		17,076
Loans, pledged as collateral and net of allowances (1)(2)(3)	364,589			—		364,589
Loans held for sale	1,322			—		1,322
Investment securities available-for-sale, at fair value	68,997			166,769		(97,772		)
Investment securities, trading	21,851			—		21,851
Investments in deconsolidated entities	17,250			23,175		(5,925		)
Interest receivable	4,299			—		4,299
Principal paydown receivable	17,800			—		17,800
Prepaid expenses	256			—		256
Other assets	972			—		972
Total assets	$	514,884		$	189,944	$	324,940
LIABILITIES:
Borrowings	$	297,191		$	—	$	297,191
Accrued interest expense	297			—		297
Derivative liabilities, at fair value	3,346			—		3,346
Accounts payable and other liabilities	255			—		255
Total liabilities	301,089			—		301,089
Retained earnings	206,876			189,944		16,932
Non-controlling interests	8,876			—		8,876
Accumulated other comprehensive loss	(1,957		)	—		(1,957		)
Total equity	213,795			189,944		23,851
Total liabilities and equity	$	514,884		$	189,944	$	324,940

(1) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, $40.3 million of specific reserves and $142,000 of general reserves on CRE loans were deconsolidated as of January 1, 2016.

(2) As part of the deconsolidation of Apidos Cinco CDO, $1.3 million of specific reserves on the bank loans were deconsolidated as of January 1, 2016.

(3) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, the Company deconsolidated four loans representing the senior participations in commercial real estate loans totaling $91.3 million that were previously disclosed as both impaired loans and troubled debt restructurings as of December 31, 2015.

In November 2014, the FASB issued guidance to eliminate the use of different methods in practice and thereby reduce existing diversity under GAAP in the accounting for hybrid financial instruments issued in the form of shares. An entity that issues or invests in a hybrid financial instrument is required to separate an embedded derivative feature from the host contract (for example, an underlying share) and account for the feature as a derivative according to Accounting Standards Codification ("ASC") Subtopic 815-10 on derivatives and hedging if certain criteria are met. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

In August 2014, the FASB issued guidance that clarifies the disclosures management must make in its interim and annual financial statement footnotes when management has determined that conditions exist that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued (or within one year after the date the financial statements are available to be issued when applicable). In accordance with this guidance, management’s assessment is required to be made each reporting period and should be based on relevant conditions and events that are known and reasonably knowable at the date the financial statements are issued. In all cases, to the extent that substantial doubt about the entity’s ability to continue as a going concern is determined to be probable, management must disclose the principal conditions or events that gave rise to the substantial doubt about the entity’s ability to continue as a going concern, management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, and management’s plans that either alleviate or are intended to mitigate the conditions or events that gave rise to the substantial doubt about the entity’s ability to continue as a going concern. Additionally, to the extent substantial doubt about the entity’s ability to continue as a going concern is not alleviated by management’s plans, management must indicate in the footnotes that there is substantial doubt about the entity’s ability to continue as a going concern. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effect of adoption.

In August 2014, the FASB issued guidance that provides for the election of a measurement alternative when a reporting entity determines that it is the primary beneficiary of a collateralized financing entity and, hence, is required to consolidate that collateralized financing entity. The measurement alternative allows a qualifying consolidated collateralized financing entity to use the more observable of the fair value of the financial assets or the fair value of the financial liabilities adjusted by the carrying amount of non-financial assets and the fair value of any beneficial interests retained by the reporting entity (including those beneficial interests that represent compensation for services). Alternatively, if the measurement alternative is not elected for a qualifying consolidated collateralized financing entity, this guidance requires that the financial assets and financial liabilities be measured in accordance with ASC Topic 820, and that any difference in the fair value of the financial assets and the fair value of the financial liabilities be reflected in earnings and attributed to the reporting entity in the consolidated statement of operations. This guidance was effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Adoption did not have a material impact on the Company's consolidated financial statements.

Reclassifications

Reclassifications

Certain reclassifications have been made to the 2015 consolidated financial statements to conform to the 2016 presentation.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Variable Interest Entity

The following table summarizes the net impact of the deconsolidation of the five VIEs upon adoption on January 1, 2016 (in thousands) net of eliminations:

	Total Deconsolidated VIEs			Retained Interest as of 1/1/2016		Net Impact on Deconsolidation
ASSETS:
Cash and cash equivalents	$	472		$	—	$	472
Restricted cash	17,076			—		17,076
Loans, pledged as collateral and net of allowances (1)(2)(3)	364,589			—		364,589
Loans held for sale	1,322			—		1,322
Investment securities available-for-sale, at fair value	68,997			166,769		(97,772		)
Investment securities, trading	21,851			—		21,851
Investments in deconsolidated entities	17,250			23,175		(5,925		)
Interest receivable	4,299			—		4,299
Principal paydown receivable	17,800			—		17,800
Prepaid expenses	256			—		256
Other assets	972			—		972
Total assets	$	514,884		$	189,944	$	324,940
LIABILITIES:
Borrowings	$	297,191		$	—	$	297,191
Accrued interest expense	297			—		297
Derivative liabilities, at fair value	3,346			—		3,346
Accounts payable and other liabilities	255			—		255
Total liabilities	301,089			—		301,089
Retained earnings	206,876			189,944		16,932
Non-controlling interests	8,876			—		8,876
Accumulated other comprehensive loss	(1,957		)	—		(1,957		)
Total equity	213,795			189,944		23,851
Total liabilities and equity	$	514,884		$	189,944	$	324,940

(1) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, $40.3 million of specific reserves and $142,000 of general reserves on CRE loans were deconsolidated as of January 1, 2016.

(2) As part of the deconsolidation of Apidos Cinco CDO, $1.3 million of specific reserves on the bank loans were deconsolidated as of January 1, 2016.

(3) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, the Company deconsolidated four loans representing the senior participations in commercial real estate loans totaling $91.3 million that were previously disclosed as both impaired loans and troubled debt restructurings as of December 31, 2015.

The following table shows the classification and carrying value of assets and liabilities of the Company's consolidated VIEs as of September 30, 2016 (in thousands):

	Apidos I		Apidos III		Whitney CLO I		RCC CRE Notes 2013		RCC 2014-CRE2		RCC 2015-CRE3		RCC 2015-CRE4		Total
ASSETS
Restricted cash (1)	$	280	$	153	$	153	$	—	$	—	$	2,000	$	2,887	$	5,473
Loans held for investment	—		—		—		26,605		255,744		258,881		260,512		801,742
Interest receivable	—		—		—		292		1,003		1,117		977		3,389
Prepaid assets	—		—		—		6		5		5		5		21
Principal paydown receivable	—		—		—		36,600		—		8,000		—		44,600
Other assets	—		—		—		208		—		45		—		253
Total assets (2)	$	280	$	153	$	153	$	63,711	$	256,752	$	270,048	$	264,381	$	855,478
LIABILITIES
Borrowings	$	—	$	—	$	—	$	16,179	$	135,857	$	203,482	$	173,453	$	528,971
Accrued interest expense	—		—		—		25		107		209		159		500
Accounts payable and other liabilities	—		—		—		33		10		53		51		147
Total liabilities	$	—	$	—	$	—	$	16,237	$	135,974	$	203,744	$	173,663	$	529,618

(1)    Includes $2.9 million designated to fund future commitments on specific commercial real estate loans in certain of the securitizations.

(2)    Assets of each of the consolidated VIEs may only be used to settle the obligations of each respective VIE.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs as of September 30, 2016 (in thousands):

	Unconsolidated Variable Interest Entities
	LCC		Unsecured Junior Subordinated Debentures			RCAM Managed CDOs		Investment in ZAIS CLO		Investment in Harvest CLOs		RREF CDO 2007-1		Apidos Cinco CDO		RCM Global LLC		Pelium Capital		Pearlmark Mezz		Total		Maximum Exposure to Loss
Investments in unconsolidated entities	$	44,777	$	1,548		$	—	$	—	$	—	$	—	$	—	$	306	$	24,767	$	16,751	$	88,149	$	88,149
Investment securities, available-for-sale	—		—			—		10,619		23,590		94,353		20,012		—		—		—		148,574		$	148,574
Intangible assets	—		—			512		—		—		—		—		—		—		—		512		$	512
Total assets	44,777		1,548			512		10,619		23,590		94,353		20,012		306		24,767		16,751		237,235
Borrowings	—		51,548			—				—		—		—		—		—		—		51,548		N/A
Total liabilities	—		51,548			—				—		—		—		—		—		—		51,548		N/A
Net asset (liability)	$	44,777	$	(50,000	)	$	512	$	10,619	$	23,590	$	94,353	$	20,012	$	306	$	24,767	$	16,751	$	185,687	N/A

XML

VARIABLE INTEREST ENTITIES (Tables)

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entity

The following table summarizes the net impact of the deconsolidation of the five VIEs upon adoption on January 1, 2016 (in thousands) net of eliminations:

	Total Deconsolidated VIEs			Retained Interest as of 1/1/2016		Net Impact on Deconsolidation
ASSETS:
Cash and cash equivalents	$	472		$	—	$	472
Restricted cash	17,076			—		17,076
Loans, pledged as collateral and net of allowances (1)(2)(3)	364,589			—		364,589
Loans held for sale	1,322			—		1,322
Investment securities available-for-sale, at fair value	68,997			166,769		(97,772		)
Investment securities, trading	21,851			—		21,851
Investments in deconsolidated entities	17,250			23,175		(5,925		)
Interest receivable	4,299			—		4,299
Principal paydown receivable	17,800			—		17,800
Prepaid expenses	256			—		256
Other assets	972			—		972
Total assets	$	514,884		$	189,944	$	324,940
LIABILITIES:
Borrowings	$	297,191		$	—	$	297,191
Accrued interest expense	297			—		297
Derivative liabilities, at fair value	3,346			—		3,346
Accounts payable and other liabilities	255			—		255
Total liabilities	301,089			—		301,089
Retained earnings	206,876			189,944		16,932
Non-controlling interests	8,876			—		8,876
Accumulated other comprehensive loss	(1,957		)	—		(1,957		)
Total equity	213,795			189,944		23,851
Total liabilities and equity	$	514,884		$	189,944	$	324,940

(1) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, $40.3 million of specific reserves and $142,000 of general reserves on CRE loans were deconsolidated as of January 1, 2016.

(2) As part of the deconsolidation of Apidos Cinco CDO, $1.3 million of specific reserves on the bank loans were deconsolidated as of January 1, 2016.

(3) As part of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1, the Company deconsolidated four loans representing the senior participations in commercial real estate loans totaling $91.3 million that were previously disclosed as both impaired loans and troubled debt restructurings as of December 31, 2015.

The following table shows the classification and carrying value of assets and liabilities of the Company's consolidated VIEs as of September 30, 2016 (in thousands):

	Apidos I		Apidos III		Whitney CLO I		RCC CRE Notes 2013		RCC 2014-CRE2		RCC 2015-CRE3		RCC 2015-CRE4		Total
ASSETS
Restricted cash (1)	$	280	$	153	$	153	$	—	$	—	$	2,000	$	2,887	$	5,473
Loans held for investment	—		—		—		26,605		255,744		258,881		260,512		801,742
Interest receivable	—		—		—		292		1,003		1,117		977		3,389
Prepaid assets	—		—		—		6		5		5		5		21
Principal paydown receivable	—		—		—		36,600		—		8,000		—		44,600
Other assets	—		—		—		208		—		45		—		253
Total assets (2)	$	280	$	153	$	153	$	63,711	$	256,752	$	270,048	$	264,381	$	855,478
LIABILITIES
Borrowings	$	—	$	—	$	—	$	16,179	$	135,857	$	203,482	$	173,453	$	528,971
Accrued interest expense	—		—		—		25		107		209		159		500
Accounts payable and other liabilities	—		—		—		33		10		53		51		147
Total liabilities	$	—	$	—	$	—	$	16,237	$	135,974	$	203,744	$	173,663	$	529,618

(1)    Includes $2.9 million designated to fund future commitments on specific commercial real estate loans in certain of the securitizations.

(2)    Assets of each of the consolidated VIEs may only be used to settle the obligations of each respective VIE.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs as of September 30, 2016 (in thousands):

	Unconsolidated Variable Interest Entities
	LCC		Unsecured Junior Subordinated Debentures			RCAM Managed CDOs		Investment in ZAIS CLO		Investment in Harvest CLOs		RREF CDO 2007-1		Apidos Cinco CDO		RCM Global LLC		Pelium Capital		Pearlmark Mezz		Total		Maximum Exposure to Loss
Investments in unconsolidated entities	$	44,777	$	1,548		$	—	$	—	$	—	$	—	$	—	$	306	$	24,767	$	16,751	$	88,149	$	88,149
Investment securities, available-for-sale	—		—			—		10,619		23,590		94,353		20,012		—		—		—		148,574		$	148,574
Intangible assets	—		—			512		—		—		—		—		—		—		—		512		$	512
Total assets	44,777		1,548			512		10,619		23,590		94,353		20,012		306		24,767		16,751		237,235
Borrowings	—		51,548			—				—		—		—		—		—		—		51,548		N/A
Total liabilities	—		51,548			—				—		—		—		—		—		—		51,548		N/A
Net asset (liability)	$	44,777	$	(50,000	)	$	512	$	10,619	$	23,590	$	94,353	$	20,012	$	306	$	24,767	$	16,751	$	185,687	N/A

XML

SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Elements [Abstract]

Schedule of Other Significant Noncash Transactions

Supplemental disclosure of cash flow information is summarized for the periods indicated (in thousands):

	For the Nine Months Ended
	September 30,
	2016			2015
Non-cash operating activities include the following:
Reclassification of linked transactions, net at fair value to investment securities available-for-sale, pledged as collateral, at fair value and borrowings (1)	$	—		$	15,367
Interest expense paid by third party (2)	$	(107	)	$	—
Operating liabilities assumed by third party (2)	$	(192	)	$	—
Non-cash investing activities include the following:
Reclassification of linked transactions, net at fair value to investment securities available-for-sale, pledged as collateral, at fair value (1)	$	—		$	48,764
Retained beneficial interest in unconsolidated securitization entities	$	(22,476	)	$	—
Loans acquired through collateralized debt obligation liquidation	$	(44,893	)	$	—
Securities acquired through collateralized debt obligation liquidation	$	(20,837	)	$	—
Non-cash financing activities include the following:
Distributions on common stock accrued but not paid	$	13,012		$	20,667
Distributions on preferred stock accrued but not paid	$	4,010		$	4,077
Reclassification of linked transactions, net at fair value to borrowings (1)	$	—		$	33,397
Senior secured revolving credit facility assumed by third party (2)	$	(122,000	)	$	—
Senior secured revolving credit facility paid down by third party (2)	$	(22,000	)	$	—

(1) As a result of an accounting standards update adopted on January 1, 2015, the Company unlinked its previously linked transactions, resulting in non-cash increases in both its investment securities available-for-sale, pledged as collateral, at fair value and related repurchase agreements borrowings balances.

(2) On August 4, 2016, the Company completed the sale of Northport TRS, LLC. The Purchaser assumed $122.0 million and paid down $22.0 million of principal and $107,000 of interest expense on the Company’s behalf of the senior secured revolving credit agreement. The Purchaser assumed $192,000 of accounts payable and accrued legal fees recorded to complete the sale. See Note 7.

XML

INVESTMENT SECURITIES TRADING (Tables)

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment trading securities at fair value

The following table summarizes the Company's structured notes and RMBS that are classified as investment securities, trading and carried at fair value (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
As of September 30, 2016:
Structured notes	$	5,914	$	419	$	(2,586	)	$	3,747
Total	$	5,914	$	419	$	(2,586	)	$	3,747
As of December 31, 2015:
Structured notes	$	28,576	$	1,674	$	(4,700	)	$	25,550
RMBS	1,896		—		(1,896		)	—
Total	$	30,472	$	1,674	$	(6,596	)	$	25,550

XML

INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Tables)

9 Months Ended

Sep. 30, 2016

Available-for-sale Securities [Abstract]

Available-for-sale Securities

The following table summarizes the Company's investment securities, including those pledged as collateral and classified as available-for-sale. ABS may include, but are not limited to the Company's investments in RREF CDO 2007-1, Apidos Cinco CDO, Harvest CLO Securities, ZAIS and other securities backed by syndicated bank loans, and other loan obligations. These securities are carried at fair value (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value(1)
As of September 30, 2016:
ABS	$	149,320	$	3,975	$	(149	)	$	153,146
CMBS	82,595		477		(1,311		)	81,761
RMBS	1,624		174		—			1,798
Total	$	233,539	$	4,626	$	(1,460	)	$	236,705
As of December 31, 2015:
ABS	$	41,994	$	3,218	$	(998	)	$	44,214
CMBS	158,584		2,631		(1,791		)	159,424
RMBS	2,156		122		(88		)	2,190
Corporate bonds	2,422		—		(162		)	2,260
Total	$	205,156	$	5,971	$	(3,039	)	$	208,088

(1) As of September 30, 2016 and December 31, 2015, $82.1 million and $162.3 million, respectively, of investment securities available-for-sale were pledged as collateral under related financings.

The following table summarizes the Company's sales of investment securities available-for-sale (in thousands, except number of securities):

	For the Three Months Ended						For the Nine Months Ended
	Positions Sold	Positions Redeemed	Par Amount Sold/Redeemed		Realized Gain (Loss)		Positions Sold	Positions Redeemed	Par Amount Sold/Redeemed		Realized Gain (Loss)
September 30, 2015:
ABS	8	—	$15,462		$2,437		15	3	$	31,399	$	10,547
RMBS	—	—	$	—	$	—	6	—	$	28,305	$	984

Estimated maturities of available-for-sale securities

The following table summarizes the estimated maturities of the Company’s CMBS, RMBS, ABS and corporate bonds according to their estimated weighted average life classifications (in thousands, except percentages):

Weighted Average Life	Fair Value			AmortizedCost		Weighted Average Coupon
As of September 30, 2016:
Less than one year	$	178,357	(1)	$	179,516	6.29%
Greater than one year and less than five years	15,886			15,489		4.27%
Greater than five years and less than ten years	25,289			22,477		9.98%
Greater than ten years	17,173			16,057		8.74%
Total	$	236,705		$	233,539	6.68%
As of December 31, 2015:
Less than one year	$	117,221	(1)	$	118,215	7.13%
Greater than one year and less than five years	71,370			68,808		5.31%
Greater than five years and less than ten years	12,382			11,271		10.45%
Greater than ten years	7,115			6,862		16.85%
Total	$	208,088		$	205,156	7.03%

(1) The Company expects that the maturity dates of these CMBS and ABS will either be extended or that they will be paid in full.

Gross unrealized loss and fair value of securities

The following table shows the fair value, gross unrealized losses and number of securities aggregated by investment category and length of time, for those individual investment securities available-for-sale that have been in a continuous unrealized loss position during the periods specified (in thousands, except number of securities):

	Less than 12 Months						More than 12 Months						Total
	Fair Value		Unrealized Losses			Number of Securities	Fair Value		Unrealized Losses			Number of Securities	Fair  Value		Unrealized Losses			Number of Securities
As of September 30, 2016:
ABS	$	1,066	$	(147	)	2	$	40	$	(2	)	1	$	1,106	$	(149	)	3
CMBS	37,798		(950		)	17	13,937		(361		)	5	51,735		(1,311		)	22
RMBS	—		—			—	—		—			—	—		—			—
Total temporarily impaired securities	$	38,864	$	(1,097	)	19	$	13,977	$	(363	)	6	$	52,841	$	(1,460	)	25
As of December 31, 2015:
ABS	$	2,330	$	(824	)	5	$	668	$	(174	)	5	$	2,998	$	(998	)	10
CMBS	79,570		(849		)	31	13,783		(942		)	15	93,353		(1,791		)	46
RMBS	1,157		(88		)	2	—		—			—	1,157		(88		)	2
Corporate bonds	65		(18		)	1	1,327		(144		)	1	1,392		(162		)	2
Total temporarily impaired securities	$	83,122	$	(1,779	)	39	$	15,778	$	(1,260	)	21	$	98,900	$	(3,039	)	60

XML

LOANS (Tables)

9 Months Ended

Sep. 30, 2016

LOANS HELD FOR INVESTMENT [Abstract]

Summary of loans held for Investments

The following is a summary of the Company’s loans (in thousands):

Loan Description	Principal			Unamortized (Discount) Premium, net (1)			Carrying Value (2) (3)
As of September 30, 2016:
CRE whole loans	$	1,367,998		$	(6,815	)	$	1,361,183
Mezzanine loans (5)	—			—			—
Middle market loans	51,850			(311		)	51,539
Residential mortgage loans, held for investment	3,292			—			3,292
Subtotal loans before allowance	1,423,140			(7,126		)	1,416,014
Allowance for loan loss	(9,433		)	—			(9,433		)
Total loans held for investment, net of allowance	1,413,707			(7,126		)	1,406,581
Middle market loans held for sale	7,182			—			7,182
Residential mortgage loans held for sale, at fair value (4)	190,433			—			190,433
Total loans held for sale	197,615			—			197,615
Total loans, net	$	1,611,322		$	(7,126	)	$	1,604,196
As of December 31, 2015:
Commercial real estate loans:
Whole loans	$	1,640,744		$	(9,943	)	$	1,630,801
B notes	15,934			—			15,934
Mezzanine loans	45,368			4			45,372
Total commercial real estate loans	1,702,046			(9,939		)	1,692,107
Bank loans	134,890			(373		)	134,517
Middle market loans	380,687			(1,235		)	379,452
Residential mortgage loans, held for investment	1,746			—			1,746
Subtotal loans before allowance	2,219,369			(11,547		)	2,207,822
Allowance for loan loss	(47,071		)	—			(47,071		)
Total loans held for investment, net of allowance	2,172,298			(11,547		)	2,160,751
Bank loans held for sale	1,475			—			1,475
Residential mortgage loans held for sale, at fair value (4)	94,471			—			94,471
Total loans held for sale	95,946			—			95,946
Total loans, net	$	2,268,244		$	(11,547	)	$	2,256,697

(1) Amounts include deferred amendment fees of $12,000 being amortized over the life of the loans as of September 30, 2016. Amounts include deferred amendment fees of $42,000 and deferred upfront fees of $12,000 being amortized over the life of the loans as of December 31, 2015.  Amounts also include loan origination fees of $6.7 million and $9.9 million as of September 30, 2016 and December 31, 2015, respectively.

(2) As a result of the consolidation guidance adopted January 1, 2016, the Company deconsolidated loans held for investment in the amount of $271.8 million of its CRE loans and $134.5 million of its bank loans and the related allowance for loan losses of $41.7 million (see Note 2).

(3) Substantially all loans are pledged as collateral under various borrowings as of September 30, 2016 and December 31, 2015, respectively.

(4) Amortized cost approximates fair value.

(5) As a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, a mezzanine loan with a par value of $28.8 million was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero as of September 30, 2016.

Summary of commercial real estate loans held for investment [Table Text Block]

The following is a summary of the Company's commercial real estate loans held for investment (in thousands):

Description	Quantity	Amortized Cost		Contracted Interest Rates	Maturity Dates(3)
As of September 30, 2016:
Whole loans, floating rate (1)(3) (4) (5) (6) (7)	76	$	1,361,183	LIBOR plus 2.50% to LIBOR plus 6.45%	January 2017 to October 2019
Mezzanine loans (10)	1	—		N/A	September 2021
Total (2) (9)	77	$	1,361,183
As of December 31, 2015:
Whole loans, floating rate(1) (3) (4) (5) (6) (7)	87	$	1,630,801	LIBOR plus 1.75% to LIBOR plus 12.00%	February 2016 to February 2019
B notes, fixed rate	1	15,934		8.68%	April 2016
Mezzanine loans, fixed rate (8)	2	45,372		9.01%	September 2016
Total (2)	90	$	1,692,107

(1) Whole loans had $67.3 million and $112.6 million in unfunded loan commitments as of September 30, 2016 and December 31, 2015, respectively.  These unfunded commitments are advanced as the borrowers formally request additional funding as permitted under the loan agreement and any necessary approvals have been obtained.

(2) Totals do not include allowances for loan losses of $9.4 million and $41.8 million as of September 30, 2016 and December 31, 2015, respectively.

(3) Maturity dates do not include possible extension options that may be available to the borrowers.

(4) Includes two whole loans with a combined $11.2 million and $51.2 million senior component as of September 30, 2016 and December 31, 2015, respectively, that entered into modifications in 2016 and 2015 that resulted in a fixed rate of 0.50% as of September 30, 2016 and December 31, 2015, respectively (the difference of which was a result of the deconsolidation of RREF CDO 2006-1 and RREF CDO 2007-1 - see Note 2). The two loans were previously identified as troubled debt restructurings ("TDR's").

(5) Includes four whole loans with a combined $4.5 million in mezzanine components that have interest rates ranging from 1.5% to 5.2% as of September 30, 2016 and December 31, 2015.

(6) Includes a $799,000 junior mezzanine tranche of a whole loan that has a fixed rate of 10.0% as of September 30, 2016 and December 31, 2015.

(7) Contracted interest rates do not include a whole loan with an amortized cost of $2.0 million and $32.5 million as of September 30, 2016 and December 31, 2015, respectively, that entered into modifications in 2016 and 2015 which reduced the floating rate spread to 1.00% as of September 30, 2016 and December 31, 2015, respectively (the difference of which was a result of the deconsolidation of RREF CDO 2007-1 - see Note 2). The loan was previously identified as a TDR.

(8) Contracted interest rates and maturity dates do not include rates or maturity dates associated with one loan with an amortized cost of $38.1 million that was fully reserved as of June 30, 2015.

(9) As a result of updated accounting guidance, effective January 1, 2016 (see Note 2), the Company deconsolidated all of the assets of RREF CDO 2006-1 and RREF CDO 2007-1, resulting in the removal of $271.8 million of loans pledged as collateral from its balance sheet.

(10) As a result of RREF CDO 2006-1 being called and liquidated on April 25, 2016, a mezzanine loan with a par value of $28.8 million was acquired as part of the liquidation proceeds and is reflected on the Company's balance sheet at a fair value of zero at September 30, 2016. The mezzanine loan is comprised of two tranches, with maturity dates of November 2016 and September 2021.

Summary lien position and status of our bank and middle market loans

The following table provides information as to the lien position and status of the Company's bank loans, at amortized cost (in thousands) prior to deconsolidation of Apidos Cinco CDO as of January 1, 2016 (see Note 2):

	Apidos I		Apidos Cinco		Total
As of December 31, 2015:
Loans held for investment:
First lien loans	$	—	$	131,281	$	131,281
Second lien loans	—		1,692		1,692
Defaulted first lien loans	—		1,544		1,544
Defaulted second lien loans	—		—		—
Total	—		134,517		134,517
First lien loans held for sale at fair value	153		1,322		1,475
Total	$	153	$	135,839	$	135,992

Summary of the weighted average life of bank loans at amortized cost

The following is a summary of the weighted average maturity of the Company’s middle market loans, at carrying value (in thousands):

	September 30, 2016		December 31, 2015
Less than one year	$	—	$	14,960
Greater than one year and less than five years	20,274		250,709
Five years or greater	38,447		109,844
Total	$	58,721	$	375,513

The following is a summary of the weighted average maturity of the Company’s bank loans, at amortized cost and loans held-for-sale, at the lower of cost or market (in thousands):

	December 31, 2015
Less than one year	$	3,922
Greater than one year and less than five years	128,480
Five years or greater	3,590
Total	$	135,992

Schedule lien position and status of middle market loans, at amortized cost

The following table provides information as to the lien position and status of the Company's middle market loans, at carrying value (in thousands):            

	September 30, 2016		December 31, 2015
First Lien	$	—	$	248,367
Second Lien	51,539		127,146
First lien loans held for sale, at fair value - defaulted	4,625		—
Second lien loans held for sale, at fair value	2,557		—
Total	$	58,721	$	375,513

Summary of the weighted average life of the commercial real estate loans at amortized cost

The following is a summary of maturity of the Company’s commercial real estate loans, at amortized cost (in thousands):

Description	2016		2017		2018 and Thereafter		Total
As of September 30, 2016:
Whole loans	$	—	$	44,770	$	1,316,413	$	1,361,183
Mezzanine loans (2)	—		—		—		—
Total (1)	$	—	$	44,770	$	1,316,413	$	1,361,183
As of December 31, 2015:	2016		2017		2018 and Thereafter		Total
B notes	$	15,934	$	—	$	—	$	15,934
Mezzanine loans	13,011		—		32,361		45,372
Whole loans	9,958		140,712		1,480,131		1,630,801
Total (1)	$	38,903	$	140,712	$	1,512,492	$	1,692,107

(1) Contractual maturity of commercial real estate loans assumes full exercise of extension options available to borrowers.

(2) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF CDO 2006-1.

Allocation of allowance for loan loss

The following is a summary of the allocation of the allowance for loan loss with respect to the Company's loans (in thousands, except percentages) by asset class (in thousands):

Description	Allowance for Loan Loss		Percentage of Total Allowance
As of September 30, 2016:
CRE whole loans	$	9,422	99.88%
Mezzanine loans (2)	—		—%
Residential mortgage loans	11		0.12%
Total (1)	$	9,433
As of December 31, 2015:
B notes	$	15	0.03%
Mezzanine loans	38,079		80.90%
CRE whole loans	3,745		7.96%
Bank loans	1,282		2.72%
Middle market loans	3,939		8.37%
Residential mortgage loans	11		0.02%
Total	$	47,071

(1) As a result of amendments to consolidation accounting guidance adopted January 1, 2016, the Company deconsolidated loans held for investment in the amount of $271.8 million of its CRE loans and $134.5 million of its bank loans and the related allowance for loan losses of $41.7 million (see Note 2).

(2) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF CDO 2006-1.

XML

INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables)

9 Months Ended

Sep. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Unconsolidated Entities

The following table shows the Company's investments in unconsolidated entities as of September 30, 2016 and December 31, 2015 and equity in earnings of unconsolidated subsidiaries for the three and nine months ended September 30, 2016 and 2015 (in thousands):

						Equity in Earnings of Unconsolidated Subsidiaries
		Balance as of		Balance as of		For the three months ended			For the nine months ended			For the three months ended			For the nine months ended
	Ownership %	September 30, 2016		December 31, 2015		September 30, 2016			September 30, 2016			September 30, 2015			September 30, 2015
RRE VIP Borrower, LLC (1)	—%	$	—	$	—	$	—		$	35		$	—		$	46
Investment in LCC Preferred Stock	29.0%	44,777		42,017		415			2,759			961			1,362
Investment in CVC Global Credit Opportunities Fund (2)	—%	—		—		—			—			(628		)	293
Pearlmark Mezz (3)	47.7%	16,751		6,465		132			552			—			—
RCM Global, LLC(4)	28.6%	306		—		(560		)	(160		)	—			—
Pelium Capital Partners, L.P. (4)	80.2%	24,767		—		1,045			2,765			—			—
Investment in School Lane House (5)		—		—		—			(1		)	1			1
Subtotal		86,601		48,482		1,032			5,950			334			1,702
Investment in RCT I and II (6)	3.0%	1,548		1,548		(636		)	(1,928		)	(610		)	(1,805		)
Total		$	88,149	$	50,030	$	396		$	4,022		$	(276	)	$	(103	)

(1) The investment in RRE VIP Borrower was sold as of December 31, 2014. Earnings for the three and nine months ended September 30, 2016 and 2015 are related toinsurance premium and property tax refunds and the liquidation of bank accounts with respect to the underlying sold properties of the portfolio.

(2) In December 2015, the Company elected a full redemption of its remaining investment in the fund.

(3) The Company has committed to invest up to $50.0 million in Pearlmark Mezzanine Realty Partners IV, L.P. The commitment termination date ends the earlier of when the original commitment is fully funded, or the fifth anniversary following the final closing date of June 24, 2015.

(4) Pursuant to the new consolidation guidance adopted January 1, 2016, these previously consolidated VIEs are now accounted for under the equity method.

(5) Investment in School Lane House was sold as of December 31, 2014. Earnings for the three and nine months ended September 30, 2016 and 2015 related to the return of a security deposit and payment of an insurance claim.

(6) For the three and nine months ended September 30, 2016 and 2015, these amounts are recorded in interest expense on the Company's consolidated statements of operations.

XML

FINANCING RECEIVABLES (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Allowance for loan losses and recorded investments in loans

The following tables show the allowance for loan and lease losses and recorded investments in loans and leases for the years indicated (in thousands):

	Commercial Real Estate Loans			Bank Loans			Middle Market Loans			Residential Mortgage Loans			Direct Financing Leases		Total
As of September 30, 2016:
Allowance for Loan and Leases Losses:
Allowance for losses at January 1, 2016	$	41,839		$	1,282		$	3,939		$	11		$	465	$	47,536
Provision (recovery) for loan and lease losses	7,997			(358		)	12,180			—			—		19,819
Loans charged-off	—			358			(16,119		)	—			—		(15,761		)
Deconsolidation of VIEs	(40,414		)	(1,282		)	—			—			—		(41,696		)
Allowance for losses at September 30, 2016	$	9,422		$	—		$	—		$	11		$	465	$	9,898
Ending balance:
Individually evaluated for impairment	$	8,059		$	—		$	—		$	—		$	465	$	8,524
Collectively evaluated for impairment	$	1,363		$	—		$	—		$	11		$	—	$	1,374
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
Loans and Leases:
Ending balance:
Individually evaluated for impairment	$	38,133		$	—		$	51,539		$	—		$	1,036	$	90,708
Collectively evaluated for impairment	$	1,323,050		$	—		$	—		$	3,292		$	—	$	1,326,342
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
As of December 31, 2015:
Allowance for Loan and Lease Losses:
Allowance for losses at January 1, 2015	$	4,043		$	570		$	—		$	—		$	—	$	4,613
Provision for loan and lease losses	37,735			2,887			8,901			(99		)	465		49,889
Loans charged-off	—			(2,175		)	(4,962		)	110			—		(7,027		)
Recoveries	61			—			—			—			—		61
Allowance for losses at December 31, 2015	$	41,839		$	1,282		$	3,939		$	11		$	465	$	47,536
Ending balance:
Individually evaluated for impairment	$	40,274		$	1,282		$	—		$	—		$	465	$	42,021
Collectively evaluated for impairment	$	1,565		$	—		$	3,939		$	11		$	—	$	5,515
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—
Loans and Leases:
Ending balance:
Individually evaluated for impairment	$	169,707		$	1,544		$	—		$	—		$	1,396	$	172,647
Collectively evaluated for impairment	$	1,522,400		$	132,973		$	379,452		$	1,746		$	—	$	2,036,571
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—	$	—

Credit quality indicators for Bank loans and Commercial real estate loans

Credit risk profiles of middle market loans were as follows (in thousands):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Held for Sale		Total
As of September 30, 2016:
Middle market loans	$	—	$	40,048	$	11,491	$	—	$	—	$	7,182	$	58,721
As of December 31, 2015:
Middle market loans	$	44,252	$	305,578	$	29,622	$	—	$	—	$	—	$	379,452

Credit risk profiles of commercial real estate loans were as follows (in thousands):

	Rating 1 (2)		Rating 2		Rating 3		Rating 4 (3)		Held for Sale		Total
As of September 30, 2016:
CRE whole loans	$	1,232,641	$	99,083	$	—	$	29,459	$	—	$	1,361,183
Mezzanine loans (1)	—		—		—		—		—		—
	$	1,232,641	$	99,083	$	—	$	29,459	$	—	$	1,361,183
As of December 31, 2015:
CRE whole loans	$	1,596,099	$	32,500	$	—	$	2,202	$	—	$	1,630,801
B notes	15,934		—		—		—		—		15,934
Mezzanine loans	7,300		—		—		38,072		—		45,372
	$	1,619,333	$	32,500	$	—	$	40,274	$	—	$	1,692,107

(1) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF 2006-1.

(2) Includes four loans which were impaired as of December 31, 2015.

(3) Includes three loans which were impaired as of September 30, 2016.

Credit risk profiles of bank loans were as follows (in thousands):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Held for Sale		Total
As of December 31, 2015:
Bank loans	$	113,897	$	17,578	$	1,498	$	—	$	1,544	$	1,475	$	135,992

Loan portfolios aging analysis

The following table presents the loan and lease portfolio aging analysis as of the dates indicated at amortized cost (in thousands):

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
As of September 30, 2016:
CRE whole loans	$	—	$	—	$	—	$	—	$	1,361,183	$	1,361,183	$	—
Mezzanine loans (3)	—		—		—		—		—		—		—
Middle market loans (4)	—		4,625		—		4,625		54,096		58,721		—
Direct Financing Leases	5		—		—		5		1,031		1,036		—
Residential mortgage loans (1)	—		—		129		129		193,597		193,726		—
Total loans	$	5	$	4,625	$	129	$	4,759	$	1,609,907	$	1,614,666	$	—
As of December 31, 2015:
CRE whole loans (2)	$	—	$	—	$	—	$	—	$	1,630,801	$	1,630,801	$	—
B notes	—		—		—		—		15,934		15,934		—
Mezzanine loans	—		38,072		—		38,072		7,300		45,372		—
Bank loans	1,544		—		—		1,544		132,973		134,517		—
Middle market loans	—		—		—		—		379,452		379,452		—
Direct Financing Leases	12		214		—		226		1,170		1,396		—
Residential mortgage loans (1)	27		41		80		148		96,069		96,217		—
Total loans	$	1,583	$	38,327	$	80	$	39,990	$	2,263,699	$	2,303,689	$	—

(1) Contains $190.4 million and $94.5 million of residential mortgage loans held for sale at fair value at September 30, 2016 and December 31, 2015, respectively.

(2) Current loans include one impaired whole loan with an amortized cost of $2.2 million, which was fully reserved as of December 31, 2015.

(3) The Company has one mezzanine loan with a par value of $28.8 million that was acquired at a fair value of zero as a result of the liquidation of RREF 2006-1.

(4) Contains one middle market loan held for sale at fair value of $4.6 million at September 30, 2016.

Impaired loans

The following tables show impaired loans as of the dates indicated (in thousands):

	Recorded Balance (1)		Unpaid Principal Balance		Specific Allowance			Average Investment in Impaired Loans		Interest Income Recognized
As of September 30, 2016:
Loans without a specific valuation allowance:
CRE whole loans	$	8,674	$	8,674	$	—		$	8,674	$	434
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Loans with a specific valuation allowance:
CRE whole loans	$	29,459	$	29,459	$	(8,059	)	$	29,459	$	65
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Bank loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Total:
CRE whole loans	$	38,133	$	38,133	$	(8,059	)	$	38,133	$	499
Mezzanine loans	—		—		—			—		—
Middle market loans	—		—		—			—		—
Residential mortgage loans	—		—		—			—		—
	$	38,133	$	38,133	$	(8,059	)	$	38,133	$	499
As of December 31, 2015:
Loans without a specific valuation allowance:
CRE whole loans	$	129,433	$	129,433	$	—		$	128,591	$	3,939
B notes	$	—	$	—	$	—		$	—	$	—
Mezzanine loans	$	—	$	—	$	—		$	—	$	—
Bank loans	$	—	$	—	$	—		$	—	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Loans with a specific valuation allowance:
CRE whole loans	$	2,202	$	2,202	$	(2,202	)	$	2,202	$	63
B notes	$	—	$	—	$	—		$	—	$	—
Mezzanine loans	$	38,072	$	38,072	$	(38,072	)	$	38,072	$	(2,879	)
Bank loans	$	1,544	$	1,551	$	(1,282	)	$	1,544	$	—
Middle market loans	$	—	$	—	$	—		$	—	$	—
Residential mortgage loans	$	—	$	—	$	—		$	—	$	—
Total:
CRE whole loans	$	131,635	$	131,635	$	(2,202	)	$	130,793	$	4,002
B notes	—		—		—			—		—
Mezzanine loans	38,072		38,072		(38,072		)	38,072		(2,879		)
Bank loans	1,544		1,551		(1,282		)	1,544		—
Middle market loans	—		—		—			—		—
Residential mortgage loans	—		—		—			—		—
	$	171,251	$	171,258	$	(41,556	)	$	170,409	$	1,123

(1) As a result of the adoption of new consolidation accounting guidance as required on January 1, 2016, the Company deconsolidated $91.3 million of senior participations in four loans that were previously classified as impaired loans in the Company's consolidated financial statements as of December 31, 2015 (see Note 2).

Troubled debt restructurings on financing receivables

The following tables show troubled-debt restructurings in the Company's loan portfolio (in thousands):

	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Nine Months Ended September 30, 2016
CRE whole loans	3	$	29,459	$	21,400
Mezzanine loans	—	—		—
Middle market loans	—	—		—
Residential mortgage loans	—	—		—
Total loans	3	$	29,459	$	21,400
	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Nine Months Ended September 30, 2015
CRE whole loans	3	$	99,959	$	99,959
B notes	—	—		—
Mezzanine loans	1	38,072		—
Bank loans	—	—		—
Middle market loans	—	—		—
Residential mortgage loans	—	—		—
Total loans	4	$	138,031	$	99,959

XML

INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of intangible assets

The following table summarizes the activity of intangible assets for the period indicated (in thousands):

	Management Contracts			Wholesale/Correspondent Relationships		Mortgage Servicing Rights			Total
Balance, January 1, 2016	$	5,316		$	90	$	20,822		$	26,228
Additions	—			—		13,815			13,815
Sales	—			—		—			—
Amortization	(1,133		)	—		(3,753		)	(4,886		)
Total before impairment adjustment	4,183			90		30,884			35,157
Temporary impairment adjustment	—			—		(5,600		)	(5,600		)
Other than temporary impairment adjustment	(3,671		)	—		—			(3,671		)
Balance, September 30, 2016	$	512		$	90	$	25,284		$	25,886

Schedule loan servicing portfolio

The activity in the loan servicing portfolio associated with capitalized servicing rights consisted of the following (in thousands):

	September 30, 2016			December 31, 2015
Balance, beginning of period	$	1,998,273		$	894,767
Additions	1,288,392			1,236,145
Payoffs, sales and curtailments	(294,899		)	(132,639		)
Balance, end of period	$	2,991,766		$	1,998,273

Servicing fees

The value of MSRs is driven by the net positive, or in some cases net negative, cash flows associated with servicing activities.  These cash flows include contractually specified servicing fees, late fees and other ancillary servicing revenue and were recorded within fee income as follows (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Servicing fees from capitalized portfolio	$	1,794	$	1,071	$	4,786	$	2,533
Late fees	$	58	$	37	$	157	$	78
Other ancillary servicing revenue	$	12	$	2	$	24	$	9

XML

BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2016

Debt Instrument [Line Items]

Information with Respect to Borrowings

Certain information with respect to the Company’s borrowings is summarized in the following table (in thousands, except percentages):

	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings		Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
As of September 30, 2016:
RCC CRE Notes 2013 Senior Notes	$	16,315	$	136	$	16,179	3.96%	12.2 years	$	63,199
RCC 2014-CRE2 Senior Notes	137,936		2,079		135,857		1.99%	15.6 years	255,062
RCC 2015-CRE3 Senior Notes	206,113		2,630		203,483		2.61%	15.5 years	260,058
RCC 2015-CRE4 Senior Notes	175,987		2,534		173,453		2.33%	15.9 years	262,579
Unsecured Junior Subordinated Debentures	51,548		—		51,548		4.64%	20.1 years	—
6.0% Convertible Senior Notes	115,000		3,654		111,346		6.00%	2.2 years	—
8.0% Convertible Senior Notes	100,000		3,758		96,242		8.00%	3.3 years	—
CRE - Term Repurchase Facilities (2)	338,070		3,101		334,969		2.86%	1.9 years	491,760
CMBS - Term Repurchase Facilities (3)	77,811		29		77,782		2.67%	210 days	113,531
Trust Certificate - Term Repurchase Facility (4)	26,661		320		26,341		6.03%	2.1 years	89,181
Residential Mortgage Financing Agreements (5)	174,642		—		174,642		3.35%	63 days	247,794
Total	$	1,420,083	$	18,241	$	1,401,842	3.48%	7.5 years	$	1,783,164

	Principal Outstanding		Unamortized Issuance Costs and Discounts		Outstanding Borrowings		Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
As of December 31, 2015:
RREF CDO 2006-1 Senior Notes (1)	$	52,772	$	—	$	52,772	2.60%	30.6 years	$	94,379
RREF CDO 2007-1 Senior Notes (1)	91,752		—		91,752		1.65%	30.8 years	210,904
RCC CRE Notes 2013 Senior Notes	58,465		664		57,801		3.21%	13.0 years	104,439
RCC 2014-CRE2 Senior Notes	198,594		2,991		195,603		1.68%	16.3 years	313,663
RCC 2015-CRE3 Senior Notes	282,127		3,466		278,661		2.25%	16.2 years	341,099
RCC 2015-CRE4 Senior Notes	223,735		3,160		220,575		2.06%	16.6 years	308,042
Apidos Cinco CDO Senior Notes (1)	135,417		—		135,417		1.25%	4.4 years	154,584
Unsecured Junior Subordinated Debentures	51,548		135		51,413		4.40%	20.8 years	—
6.0% Convertible Senior Notes	115,000		4,917		110,083		6.00%	2.9 years	—
8.0% Convertible Senior Notes	100,000		4,599		95,401		8.00%	4.0 years	—
CRE - Term Repurchase Facilities (2)	225,346		2,418		222,928		2.64%	1.6 years	321,267
CMBS - Term Repurchase Facility (3)	25,658		2		25,656		1.57%	1.1 years	31,650
Trust Certificates - Term Repurchase Facility (4)	26,659		415		26,244		5.85%	2.9 years	89,181
Residential Investments - Term Repurchase Facility (5)	782		—		782		2.75%	264 days	835
Residential Mortgage Financing Agreements (6)	85,819		—		85,819		3.10%	257 days	120,952
CMBS - Short Term Repurchase Agreements (7)	57,407		—		57,407		2.06%	18 days	79,347
Senior Secured Revolving Credit Agreement (8)	190,000		3,026		186,974		3.09%	3.2 years	376,306
Total	$	1,921,081	$	25,793	$	1,895,288	2.89%	10.6 years	$	2,546,648

(1) On January 1, 2016, RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO were deconsolidated in accordance with guidance on consolidation (see Note 2).

(2) Amounts also include accrued interest expense of $410,000 and $315,000 related to CRE repurchase facilities as of September 30, 2016 and December 31, 2015, respectively.

(3) Amounts also include accrued interest expense of $136,000 and $18,000 related to CMBS repurchase facilities as of September 30, 2016 and December 31, 2015, respectively. Amounts do not reflect CMBS repurchase agreement borrowings that are components of linked transactions as of December 31, 2015.

(4) Amounts also include accrued interest expense of $62,000 and $61,000 related to trust certificate repurchase facilities as of September 30, 2016andDecember 31, 2015, respectively.

(5) Amounts also include accrued interest expense of $0 and $30,000 related to residential investment facilities as of September 30, 2016 and December 31, 2015, respectively.

(6) The value of collateral related to residential mortgage financing agreements is the appraised value of the collateral underlying the residential mortgage loans subject to repurchase as of September 30, 2016 and December 31, 2015.

(7) Amounts also include accrued interest expense of $0 and $40,000 related to CMBS short term repurchase facilities as of September 30, 2016 and December 31, 2015.

(8) The Company sold its interest in Northport TRS, LLC and the Senior Secured Revolving Credit Agreement was assumed by the purchaser. See Note 4 and Note 7 for further details.

Schedule of Securitizations

The following table sets forth certain information with respect to the Company's consolidated securitizations:

Securitization	Closing Date	Maturity Date	End of Designated Principal Reinvestment Period (1)	Total Note Paydowns as of September 30, 2016
				(in millions)
RCC CRE Notes 2013	December 2013	December 2028	N/A	$	244.5
RCC 2014-CRE2	July 2014	April 2032	July 2016	$	97.4
RCC 2015-CRE3	February 2015	March 2032	February 2017	$	76.0
RCC 2015-CRE4	August 2015	August 2032	August 2017	$	47.7

(1) The designated principal reinvestment period is the period where principal payments received by each respective securitization may be designated by the Company to purchase funding participations of existing collateral originally underwritten at the close of each securitization, which was funded outside of the deal structure.

Schedule of Amount at Risk under Credit Facility

The following table shows information about the amount at risk under the repurchase facilities (dollars in thousands):

	Amount at Risk (1)		Weighted Average Maturity	Weighted Average Interest Rate
As of September 30, 2016:
CMBS Term Repurchase Facilities
Wells Fargo Bank, National Association	$	5,420	123 days	1.82%
Deutsche Bank AG	$	30,672	237 days	2.93%
CRE Term Repurchase Facilities
Wells Fargo Bank, National Association	$	90,393	1.8 years	2.66%
Morgan Stanley Bank, National Association	$	65,065	1.9 years	3.15%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015	$	62,575	2.1 years	6.03%
Residential Mortgage Financing Agreements
New Century Bank	$	10,584	77 days	3.50%
Wells Fargo Bank, National Association	$	62,569	59 days	3.31%

As of December 31, 2015:
CMBS Term Repurchase Facility
Wells Fargo Bank, National Association	$	6,053	1.1 years	1.57%
CRE Term Repurchase Facilities
Wells Fargo Bank, National Association	$	54,674	240 days	2.39%
Morgan Stanley Bank, National Association	$	41,248	2.7 years	2.96%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015	$	62,575	2.9 years	5.85%
Short-Term Repurchase Agreements - CMBS
Wells Fargo Securities, LLC	$	6,288	11 days	1.93%
Deutsche Bank Securities, LLC	$	16,330	20 days	2.05%
Residential Investments Term Repurchase Facility
Wells Fargo Bank, National Association	$	54	264 days	2.75%
Residential Mortgage Financing Agreements
New Century Bank	$	17,322	124 days	3.17%
Wells Fargo Bank, National Association	$	17,811	134 days	3.03%

(1) Equal to the estimated fair value of securities or loans sold, plus accrued interest income, minus the sum of repurchase agreement liabilities plus accrued interest expense.

Schedule of Contractual Obligations and Commitments

Contractual maturity dates of the Company's borrowings by category and year are presented in the table below (in thousands):

	Total		2016		2017		2018		2019		2020 and Thereafter
CRE Securitizations(1)	$	528,972	$	—	$	—	$	—	$	—	$	528,972
Repurchase Agreements	613,734		174,642		77,782		361,310		—		—
Unsecured Junior Subordinated Debentures	51,548		—		—		—		—		51,548
6.0 % Convertible Notes	111,346		—		—		111,346		—		—
8.0 % Convertible Notes	96,242		—		—		—		—		96,242
Total	$	1,401,842	$	174,642	$	77,782	$	472,656	$	—	$	676,762

(1) At September 30, 2016, RCC CRE Notes 2013's balance of principal paydown receivables relating to its underlying loan portfolio totaled $36.6 million, the entirety of which it received in cash during October 2016. The Company paid down the remaining $16.2 million RCC CRE Notes 2013 borrowings outstanding during October 2016.

CRE - Term Repurchase Facility

Debt Instrument [Line Items]

Repurchase and Mortgage Finance Facilities

The following table sets forth certain information with respect to the Company's borrowings (in thousands, except percentages):

	As of September 30, 2016						As of December 31, 2015
	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral	Weighted Average Interest Rate	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral	Weighted Average Interest Rate
CMBS Term Repurchase Facilities
Wells Fargo Bank (1)	$	18,608	$	24,008	15	1.82%	$	25,656	$	31,650	21	1.57%
Deutsche Bank (2)	59,174		89,523		20	2.93%	—		—		—	—%
CRE Term Repurchase Facilities
Wells Fargo Bank (3)	194,903		286,199		14	2.66%	123,937		179,169		9	2.39%
Morgan Stanley Bank (4)	140,066		205,561		12	3.15%	98,991		142,098		7	2.96%
Trust Certificates Term Repurchase Facility
RSO Repo SPE Trust 2015 (5)	26,341		89,181		1	6.03%	26,244		89,181		1	5.85%
Short-Term Repurchase Agreements - CMBS
Wells Fargo Securities, LLC	—		—		—	—%	13,548		19,829		3	1.93%
Deutsche Bank Securities, LLC	—		—		—	—%	43,859		59,518		17	2.10%
Residential Investments Term Repurchase Facility
Wells Fargo Bank	—		—		—	—%	782		835		1	2.75%
Residential Mortgage Financing Agreements
New Century Bank	37,775		48,359		163	3.50%	43,789		61,111		199	3.17%
Wells Fargo Bank	136,867		199,436		457	3.31%	42,030		59,841		166	3.03%
Totals	$	613,734	$	942,267			$	418,836	$	643,232

(1) The Wells Fargo Bank CMBS term repurchase facility includes $3,000 and $2,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(2) The Deutsche Bank CMBS term repurchase facility includes $26,000 and $0 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(3) The Wells Fargo Bank CRE term repurchase facility includes $1.8 million and $675,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(4) The Morgan Stanley Bank CRE term repurchase facility includes $1.3 million and $1.7 million of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

(5) The RSO Repo SPE Trust 2015 term repurchase facility includes $320,000 and $415,000 of deferred debt issuance costs as of September 30, 2016 and December 31, 2015, respectively.

XML

SHARE ISSUANCE AND REPURCHASE (Tables)

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

Schedule of Stock by Class, Issues

	For the Nine Months Ended   September 30, 2016			Total Outstanding
	Number of Shares Repurchased	Weighted Average Purchase Price		Number of Shares	Weighted Average Offering Price
8.50% Series A Preferred Stock	—	$	—	1,069,016	$	24.29
8.25% Series B Preferred Stock	195,900	$	15.80	5,544,579	$	24.02
8.625% Series C Preferred Stock	—	$	—	4,800,000	$	25.00

XML

SHARE-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of restricted common stock transactions

The following table summarizes the Company's restricted common stock transactions:

	Non-Employee Directors (1)		Non-Employees		Employees		Total
Unvested shares as of January 1, 2016	15,267		617,657		58,445		691,369
Issued	25,948		230,338		50,784		307,070
Vested	(13,895	)	(469,074	)	(18,452	)	(501,421	)
Forfeited	—		(262	)	—		(262	)
Unvested shares as of September 30, 2016	27,320		378,659		90,777		496,756

(1) Non-employees are employees of Resource America.

Schedule of restricted stock granted

The following table summarizes restricted common stock grants during the nine months ended September 30, 2016:

Date	Shares	Vesting/Year	Date(s)
January 21, 2016	130,903	33.3%	1/21/17, 1/21/18, 1/21/19
January 21, 2016	50,784	33.3%	1/21/17, 1/21/18, 1/21/19
February 1, 2016	3,421	100%	2/1/17
February 5, 2016	90,595	33.3%	2/5/17, 2/5/18, 2/5/19
March 8, 2016	13,912	100%	3/8/17
March 14, 2016	3,158	100%	3/14/17
March 31, 2016	8,840	100%	5/15/17(1)
June 6, 2016	2,702	100%	6/6/17
September 29, 2016	2,755	100%	9/29/17

(1) In connection with a grant of restricted common stock made on September 24, 2014, the Company agreed to issue up to 17,682 shares of common stock if certain loan origination performance thresholds were achieved by personnel from the Company’s loan origination team.  The performance criteria were measured at the end of two annual measurement periods which began April 1, 2014.  The agreement also provided dividend equivalent rights pursuant to which the dividends that would have been paid on the shares had they been issued on the date of grant were paid at the end of each annual measurement period if the performance criteria were met.  If the performance criteria were not met, the accrued dividends would be forfeited.  As a consequence, the Company did not record the dividend equivalent rights until earned.  On March 31, 2016, the final measurement period ended and 8,840 shares were earned. Approximately $42,000 of accrued dividend equivalent rights were paid in April 2016. These shares will vest over the subsequent 12 months at a rate of one-fourth per quarter.

Summary of stock option transactions

The following table summarizes the status of the Company’s vested stock options as of September 30, 2016:

Vested Options	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Vested as of January 1, 2016	26,250	$	46.60
Vested	—	—
Exercised	—	—
Forfeited	—	—
Expired	—	—
Vested as of September 30, 2016	26,250	$	46.60	2.20	$	—

Summary of share based compensation expense

The components of equity compensation expense for the periods presented is as follows (in thousands):

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2016		2015			2016		2015
Restricted shares granted to non-employees (1) (2)	$	1,639	$	(466	)	$	3,352	$	840
Restricted shares granted to employees	63		177			900		528
Restricted shares granted to non-employee directors	64		64			192		193
Total equity compensation expense	$	1,766	$	(225	)	$	4,444	$	1,561

(1) Non-employees are employees of Resource America.

(2) Amounts include $896,000 of equity compensation expense, for the three and nine months ended September 30, 2016, associated with the accelerated stock vesting of former executives of the Company.

XML

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Reconciliation of basic and diluted earnings per share

The following table presents a reconciliation of basic and diluted earnings per share for the periods presented as follows (in thousands, except share and per share amounts):

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Basic:
Net income (loss) allocable to common shares	$	(51,573	)	$	6,778	$	(43,436	)	$	(14,831	)
Weighted average number of shares outstanding	30,528,368			32,515,226		30,513,131			32,726,194
Basic net income (loss) per share	$	(1.69	)	$	0.21	$	(1.42	)	$	(0.45	)
Diluted:
Net income (loss) allocable to common shares	$	(51,573	)	$	6,778	$	(43,436	)	$	(14,831	)
Weighted average number of shares outstanding	30,528,368			32,515,226		30,513,131			32,726,194
Additional shares due to assumed conversion of dilutive instruments	—			435,991		—			—
Adjusted weighted-average number of common shares outstanding	30,528,368			32,951,217		30,513,131			32,726,194
Diluted net income (loss) per share	$	(1.69	)	$	0.21	$	(1.42	)	$	(0.45	)

XML

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Schedule of accumulated other comprehensive loss

The following table presents the changes in each component of accumulated other comprehensive income (loss) for the nine months ended September 30, 2016 (dollars in thousands):

	Net unrealized (loss) gain on derivatives			Net unrealized (loss) gain on securities, available-for-sale			Foreign Currency Translation		Accumulated other comprehensive income (loss)
January 1, 2016 (as adjusted)	$	(131	)	$	(835	)	$	—	$	(966	)
Other comprehensive gain (loss) before reclassifications	118			8,382			—		8,500
Amounts reclassified from accumulated other comprehensive income	(29		)	(596		)	—		(625		)
September 30, 2016	$	(42	)	$	6,951		$	—	$	6,909

XML

DISTRIBUTIONS (Tables)

9 Months Ended

Sep. 30, 2016

DISTRIBUTIONS [Abstract]

Dividends Declared

The following tables present dividends declared (on a per share basis) for the first three quarters of 2016 and each of the quarters in 2015:

Common Stock
	Date Paid	Total Dividend Paid		Dividend Per Share
		(in thousands)
2016
March 31	April 28	$	13,073	$	0.42
June 30	July 28	$	13,051	$	0.42
September 30	October 28	$	13,012	$	0.42
2015
March 31	April 28	$	21,444	$	0.64
June 30	July 28	$	21,426	$	0.64
September 30	October 28	$	20,667	$	0.64
December 31	January 28, 2016	$	13,274	$	0.42

Preferred Stock
Series A						Series B					Series C
	Date Paid	Total Dividend Paid		Dividend Per Share		Date Paid	Total Dividend Paid		Dividend Per Share		Date Paid	Total Dividend Paid		Dividend Per Share
		(in thousands)					(in thousands)					(in thousands)
2016
March 31	May 2	$	568	$	0.531250	May 2	$	2,859	$	0.515625	May 2	$	2,588	$	0.539063
June 30	August 1	$	568	$	0.531250	August 1	$	2,859	$	0.515625	August 1	$	2,588	$	0.539063
September 30	October 31	$	568	$	0.531250	October 31	$	2,859	$	0.515625	October 31	$	2,588	$	0.539063
2015
March 31	April 30	$	568	$	0.531250	April 30	$	2,960	$	0.515625	April 30	$	2,588	$	0.539063
June 30	July 30	$	568	$	0.531250	July 30	$	2,960	$	0.515625	July 30	$	2,588	$	0.539063
September 30	October 30	$	568	$	0.531250	October 30	$	2,960	$	0.515625	October 30	$	2,588	$	0.539063
December 31	February 1, 2016	$	568	$	0.531250	February 1, 2016	$	2,960	$	0.515625	February 1, 2016	$	2,588	$	0.539063

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair value assets and liabilities measured on recurring basis

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):

	Level 1		Level 2		Level 3		Total
As of September 30, 2016:
Assets:
Investment securities, trading	$	—	$	—	$	3,747	$	3,747
Investment securities available-for-sale	—		—		236,705		236,705
Loans held for sale	—		138,209		52,224		190,433
Derivatives	—		165		3,887		4,052
Total assets at fair value	$	—	$	138,374	$	296,563	$	434,937
Liabilities:
Derivatives	$	—	$	1,819	$	339	$	2,158
Total liabilities at fair value	$	—	$	1,819	$	339	$	2,158
As of December 31, 2015:
Assets:
Investment securities, trading	$	—	$	—	$	25,550	$	25,550
Investment securities available-for-sale	—		4,451		203,637		208,088
Loans held for sale	—		66,588		29,358		95,946
Derivatives	—		826		2,620		3,446
Total assets at fair value	$	—	$	71,865	$	261,165	$	333,030
Liabilities:
Derivatives	$	—	$	—	$	3,941	$	3,941
Total liabilities at fair value	$	—	$	—	$	3,941	$	3,941

Fair value assets unobservable input reconciliation

The following table presents additional information about assets that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs (in thousands):

	CMBS			ABS			Structured Finance Securities			Loans Held for Sale			Warrants			Interest Rate Lock Commitments			Forwards - Residential Mortgage Loans			RMBS		Total
Balance, January 1, 2016	$	159,424		$	44,213		$	25,550		$	29,358		$	1,051		$	1,224		$	345		$	—	$	261,165
Included in earnings (1)	(324		)	606			86			(390		)	(198		)	22,654			145			—		22,579
Purchases/Originations	5,138			44,819			—			123,471			—			—			—			—		173,428
Sales	—			(57,639		)	—			(97,791		)	—			—			—			—		(155,430		)
Paydowns	(25,554		)	(10,853		)	(227		)	(2,424		)	—			—			—			—		(39,058		)
Issuances	—			—			—			—			—			—			—			—		—
Settlements	—			(28,425		)	—			—			(853		)	(20,201		)	(280		)	—		(49,759		)
Capitalized Interest	—			12,552			190			—			—			—			—			—		12,742
Included in OCI	(1,146		)	(24,282		)	—			—			—			—			—			—		(25,428		)
Deconsolidation of VIEs	(55,776		)	172,154			(21,852		)	—			—			—			—			—		94,526
Transfers into Level 3 (2)	—			—			—						—			—			—			1,798		1,798
Balance, September 30, 2016	$	81,762		$	153,145		$	3,747		$	52,224		$	—		$	3,677		$	210		$	1,798	$	296,563

(1) Structured finance securities, loans held for sale, interest rate lock commitments, and forwards on residential mortgage loans include $86,000, $(33,000), $0, and $0, respectively, in earnings attributable to the change in unrealized gains or (losses) relating to assets still held at the reporting date for the nine months endedSeptember 30, 2016.

The following table presents additional information about liabilities that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs (in thousands):

	Interest Rate Swaps			Forwards - Residential Mortgage Loans			Interest Rate Lock Commitments			Total
Balance, January 1, 2016	$	3,459		$	479		$	3		$	3,941
Included in earnings	50			249			43			342
Settlements	—			(393		)	(42		)	(435		)
Unrealized gains - included in accumulated other comprehensive income	(3,509		)	—			—			(3,509		)
Balance, September 30, 2016	$	—		$	335		$	4		$	339

Fair value assets and liabilities measured on nonrecurring basis

The following table summarizes the financial assets and liabilities measured at fair value on a nonrecurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as follows (in thousands):    

	Level 1		Level 2		Level 3		Total
As of September 30, 2016:
Assets:
Loans held for sale	$	—	$	2,557	$	4,625	$	7,182
Impaired loans	—		—		30,074		30,074
Mortgage servicing rights (1)	—		—		25,284		25,284
Total assets at fair value	$	—	$	2,557	$	59,983	$	62,540
As of December 31, 2015:
Assets:
Loans held for sale	$	—	$	1,279	$	153	$	1,432
Impaired loans	—		262		129,433		129,695
Total assets at fair value	$	—	$	1,541	$	129,586	$	131,127

(1) See Note 11 for a description of the valuation techniques and key assumption types to the calculation of the fair value of mortgage servicing rights.

Fair value financial instruments not reported at fair value

The fair values of the Company’s remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported in the following table (in thousands):

			Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of September 30, 2016:
Loans held-for-investment	$	1,406,581	$	1,410,911	$	—	$	50,933	$	1,359,978
CDO notes	$	528,971	$	524,864	$	—	$	—	$	524,864
Junior subordinated notes	$	49,586	$	25,372	$	—	$	—	$	25,372
Convertible notes	$	207,588	$	215,000	$	—	$	—	$	215,000
Repurchase agreements	$	613,127	$	616,575	$	—	$	—	$	616,575
Senior secured revolving credit agreement	$	—	$	—	$	—	$	—	$	—
As of December 31, 2015:
Loans held-for-investment	$	2,160,751	$	2,150,061	$	—	$	222,100	$	1,927,961
CDO notes	$	1,032,581	$	923,817	$	—	$	—	$	923,817
Junior subordinated notes	$	51,413	$	17,907	$	—	$	—	$	17,907
Convertible notes	$	205,484	$	205,484	$	—	$	—	$	205,484
Repurchase agreements	$	418,836	$	418,836	$	—	$	—	$	418,836
Senior secured revolving credit agreement	$	186,974	$	186,974	$	—	$	—	$	186,974

XML

MARKET RISK AND DERIVATIVE INSTRUMENTS (Tables) - Interest Rate Swaps

9 Months Ended

Sep. 30, 2016

Derivatives, Fair Value [Line Items]

Fair Value of Derivative Instruments

The following tables present the fair value of the Company’s derivative financial instruments as well as their classification on the Company's consolidated balance sheets and on the consolidated statements of operations for the periods presented:

Fair Value of Derivative Instruments as of September 30, 2016

(in thousands)

	Asset Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements	$	260,970	Derivatives, at fair value	$	3,677
Forward contracts - residential mortgage lending	$	79,838	Derivatives, at fair value	$	237
Forward contracts - foreign currency, hedging (1)(2)	$	16,993	Derivatives, at fair value	$	137
Forward contracts - TBA securities	$	1,000	Derivatives, at fair value	$	1
	Liability Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements	$	2,636	Derivatives, at fair value	$	4
Forward contracts - residential mortgage lending	$	352,342	Derivatives, at fair value	$	1,897
Forward contracts - foreign currency, hedging (1)(3)	$	8,848	Derivatives, at fair value	$	104
Forward contracts - TBA securities	$	43,000	Derivatives, at fair value	$	153
Interest rate swap contracts, hedging	$	—	Accumulated other comprehensive (income) loss	$	41

(1) Foreign currency forward contracts are accounted for as fair value hedges.

(2) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts in an asset position was €15.1 million as of September 30, 2016.

(3) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts in a liability position was €7.9 million as of September 30, 2016.

Fair Value of Derivative Instruments as of December 31, 2015

(in thousands)

	Asset Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate lock agreements (1)	$	105,385	Derivatives, at fair value	$	1,224
Forward contracts - residential mortgage lending	$	92,413	Derivatives, at fair value	$	345
Forward contracts - foreign currency, hedging (2)(3)	$	24,850	Derivatives, at fair value	$	727
Forward contracts - TBA securities	$	29,500	Derivatives, at fair value	$	99
Warrants (4)	$	553	Derivatives, at fair value	$	1,051
	Liability Derivatives
	Notional Amount		Balance Sheet Location	Fair Value
Interest rate swap contracts, hedging (5)	$	102,799	Derivatives, at fair value	$	3,459
Interest rate lock agreements (6)	$	505	Derivatives, at fair value	$	3
Forward contracts - residential mortgage lending	$	143,553	Derivatives, at fair value	$	479
Forward contracts - TBA securities	$	1,500	Derivatives, at fair value	$	—
Interest rate swap contracts, hedging	$	102,799	Accumulated other comprehensive (income) loss	$	(3,471	)

(1) The notional amount of the Company's IRLCs in an asset position is the total commitment weighted by the probability of closing the loan.

(2) Notional amount presented on currency converted basis. The base currency notional amount of the Company's foreign currency hedging forward contracts was €22.9 million as of December 31, 2015.

(3) Foreign currency forward contracts are accounted for as fair value hedges.

(4) The notional amount of the Company's warrants is calculated by multiplying the number of shares available for purchase by the exercise price.

(5) Interest rate swap contracts are accounted for as cash flow hedges.

(6) The notional amount of the Company's IRLCs in a liability position is the total commitment weighted by the probability of closing the loan.

The Effect of Derivative Instruments on the Statement of Income

The Effect of Derivative Instruments on the Statements of Operations for the

Nine Months EndedSeptember 30, 2016 (in thousands)

	Derivatives
		Statement of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging		Interest expense	$	(95	)
Interest rate lock agreements		Gain (loss) on sale of residential mortgage loans	$	2,452
Forward contracts - residential mortgage lending		Gain (loss) on sale of residential mortgage loans	$	(1,577	)
Forward contracts - foreign currency, hedging		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	(733	)
Forward contracts - TBA securities		Gain (loss) on sale of residential mortgage loans	$	(1,070	)

(1) Negative values indicate a decrease to the associated consolidated statements of operations line items.

The Effect of Derivative Instruments on the Statements of Operations for the

Nine Months EndedSeptember 30, 2015 (in thousands)

	Derivatives
		Statement of Operations Location	Realized and Unrealized Gain (Loss) (1)
Interest rate swap contracts, hedging		Interest expense	$	4,923
Interest rate swap contracts, hedging		Gain (loss) on sale of residential mortgage loans	$	(34	)
Interest rate lock agreements		Gain (loss) on sale of residential mortgage loans	$	1,128
Forward contracts - RMBS securities		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	(122	)
Forward contracts - residential mortgage lending		Gain (loss) on sale of residential mortgage loans	$	(197	)
Forward contracts - foreign currency, hedging		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	2,254
Options - U.S. Treasury futures		Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives	$	184
Forward contracts - TBA securities		Gain (loss) on sale of residential mortgage loans	$	415

(1) Negative values indicate a decrease to the associated consolidated statements of operations line items.

XML

OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2016

Offsetting [Abstract]

Offsetting Financial Assets and Derivative Assets

The following table presents a summary of the Company's offsetting of derivative assets for the periods presented (in thousands):

							(iv) Gross Amounts Not Offset in the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Assets		(ii) Gross Amounts Offset in the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Assets Included in the Consolidated Balance Sheets		Financial Instruments		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
As of September 30, 2016:
Derivative hedging instruments, at fair value	$	4,052	$	—	$	4,052	$	—	$	—	$	4,052
Total	$	4,052	$	—	$	4,052	$	—	$	—	$	4,052
As of December 31, 2015:
Derivative hedging instruments, at fair value	$	3,446	$	—	$	3,446	$	—	$	—	$	3,446
Total	$	3,446	$	—	$	3,446	$	—	$	—	$	3,446

Offsetting Financial Liabilities and Derivative Liabilities

The following table presents a summary of the Company's offsetting of financial liabilities and derivative liabilities for the periods presented as follows (in thousands):

							(iv) Gross Amounts Not Offset in the Consolidated Balance Sheets
	(i) Gross Amounts of Recognized Liabilities		(ii) Gross Amounts Offset in the Consolidated Balance Sheets		(iii) = (i) - (ii) Net Amounts of Liabilities Included in the Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged (2)		(v) = (iii) - (iv) Net Amount
As of September 30, 2016:
Derivative hedging instruments, at fair value	$	2,158	$	—	$	2,158	$	—	$	—	$	2,158
Repurchase agreements and term facilities (4)	613,734		—		613,734		613,734		—		—
Total	$	615,892	$	—	$	615,892	$	613,734	$	—	$	2,158
As of December 31, 2015:
Derivative hedging instruments, at fair value (3)	$	3,941	$	—	$	3,941	$	—	$	500	$	3,441
Repurchase agreements and term facilities (4)	418,836		—		418,836		418,836		—		—
Total	$	422,777	$	—	$	422,777	$	418,836	$	500	$	3,441

(1) Amounts represent collateral pledged that is available to be offset against liability balances associated with term facilities, repurchase agreements and derivative transactions.

(2) Amounts represent amounts pledged as collateral against derivative transactions.

(3) The fair value of securities and/or cash and cash equivalents pledged against the Company's swaps was $500,000 at December 31, 2015.

(4) The combined fair value of securities and loans pledged against the Company's various term facilities and repurchase agreements was $942.3 million and $643.2 million at September 30, 2016 and December 31, 2015, respectively.

XML

SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Summarized operating segment data are as follows (in thousands):

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Three Months Ended September 30, 2016
Interest income:
External customers	$	25,359		$	633		$	4,240		$	131		$	220		$	30,583
Other	6			724			27			—			12			769
Total interest income	25,365			1,357			4,267			131			232			31,352
Interest expense	8,573			—			467			—			5,080			14,120
Net interest income	16,792			1,357			3,800			131			(4,848		)	17,232
Gain on sale of mortgages	—			—			—			6,026			—			6,026
Amortization of MSRs	—			—			—			(1,491		)	—			(1,491		)
Other income from external customers	—			828			—			2,480			18			3,326
Total revenues	16,792			2,185			3,800			7,146			(4,830		)	25,093
Less:
Segment operating expenses	99			109			479			445			3,688			4,820
General and administrative	424			149			1,216			8,073			2,479			12,341
Depreciation and amortization	—			331			—			142			32			505
Impairment losses (4)	21,385			3,671			—			241			—			25,297
Provision (recovery) for loan and lease losses	7,997			(435		)	121			—			—			7,683
Equity in earnings of unconsolidated subsidiaries	(132		)	(900		)	—			—			—			(1,032		)
Other (income) expense	(32		)	29			9,631			(18		)	(793		)	8,817
Income (loss) before taxes	(12,949		)	(769		)	(7,647		)	(1,737		)	(10,236		)	(33,338		)
Income tax (expense) benefit	—			(1,236		)	—			(11,047		)	—			(12,283		)
Net income (loss)	$	(12,949	)	$	(2,005	)	$	(7,647	)	$	(12,784	)	$	(10,236	)	$	(45,621	)
	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Three Months Ended September 30, 2015
Interest income:
External customers	$	25,646		$	3,341		$	8,254		$	114		$	—		$	37,355
Other	12			803			2			144			7			968
Total interest income	25,658			4,144			8,256			258			7			38,323
Interest expense	9,004			368			1,480			433			5,045			16,330
Net interest income	16,654			3,776			6,776			(175		)	(5,038		)	21,993
Gain on sale of mortgages	—			—			—			3,154			—			3,154
Amortization of MSRs	—			—			—			(1,307		)	—			(1,307		)
Other income from external customers	—			1,033			—			1,055			17			2,105
Total revenues	16,654			4,809			6,776			2,727			(5,021		)	25,945
Less:
Segment operating expenses	50			272			1,240			71			1,361			2,994
General and administrative	633			569			978			6,317			1,726			10,223
Depreciation and amortization	—			454			—			142			32			628
Provision (recovery) for loan and lease losses	(46		)	179			901			—			—			1,034
Equity in earnings of unconsolidated subsidiaries	—			(333		)	—			—			(1		)	(334		)
Other (income) expense	6,352			(8,162		)	147			935			(798		)	(1,526		)
Income (loss) before taxes	9,665			11,830			3,510			(4,738		)	(7,341		)	12,926
Income tax (expense) benefit	—			(286		)	—			2,161			(79		)	1,796
Net income (loss)	$	9,665		$	11,544		$	3,510		$	(2,577	)	$	(7,420	)	$	14,722

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending			Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Nine Months Ended September 30, 2016:
Interest income:
External customers	$	75,600		$	1,999		$	24,620		$	329		$	333		$	102,881
Other	30			4,221			43			—			23			4,317
Total interest income	75,630			6,220			24,663			329			356			107,198
Interest expense	25,160			—			6,181			—			15,240			46,581
Net interest income	50,470			6,220			18,482			329			(14,884		)	60,617
Gain on sale of mortgages	—			—			—			15,607			—			15,607
Amortization of MSRs	—			—			—			(3,753		)	—			(3,753		)
Other income from external customers	—			2,162			—			2,809			54			5,025
Total revenues	50,470			8,382			18,482			14,992			(14,830		)	77,496
Less:
Segment operating expenses	233			679			2,990			1,354			9,382			14,638
General and administrative	1,681			847			3,229			21,262			6,334			33,353
Depreciation and amortization	—			1,132			4			413			101			1,650
Impairment losses (4)	21,385			3,671			—			241			—			25,297
Provision (recovery) for loan and lease losses	7,997			(358		)	12,180			—			—			19,819
Equity in earnings of unconsolidated subsidiaries	(585		)	(5,365		)	—			—			—			(5,950		)
Other (income) expense	(875		)	(947		)	9,828			(45		)	(1,758		)	6,203
Income (loss) before taxes	20,634			8,723			(9,749		)	(8,233		)	(28,889		)	(17,514		)
Income tax (expense) benefit	—			(973		)	—			(8,455		)	(130		)	(9,558		)
Net income (loss)	$	20,634		$	7,750		$	(9,749	)	$	(16,688	)	$	(29,019	)	$	(27,072	)

	Commercial Real Estate Lending			Commercial Finance			Middle Market Lending		Residential Mortgage Lending			Corporate & Other (1)(2)(3)			Total
For the Nine Months Ended September 30, 2015:
Interest income:
External customers	$	70,237		$	14,499		$	22,089	$	466		$	—		$	107,291
Other	82			2,607			4		145			81			2,919
Total interest income	70,319			17,106			22,093		611			81			110,210
Interest expense	23,933			2,225			3,682		721			14,773			45,334
Net interest income	46,386			14,881			18,411		(110		)	(14,692		)	64,876
Gain on sale of mortgages	—			—			—		11,594			—			11,594
Amortization of MSRs	—			—			—		(3,138		)	—			(3,138		)
Other income from external customers	—			3,398			—		4,506			51			7,955
Total revenues	46,386			18,279			18,411		12,852			(14,641		)	81,287
Less:
Segment operating expenses	56			940			2,444		1,615			6,838			11,893
General and administrative	1,382			2,238			2,262		18,009			5,750			29,641
Depreciation and amortization	—			1,346			1		372			95			1,814
Impairment losses	—			59			—		—			—			59
Provision (recovery) for loan and lease losses	38,025			1,696			4,223		(110		)	—			43,834
Equity in earnings of unconsolidated subsidiaries	(46		)	(1,655		)	—		—			(1		)	(1,702		)
Other (income) expense	7,200			(16,856		)	39		(4,618		)	(2,963		)	(17,198		)
Income (loss) before taxes	(231		)	30,511			9,442		(2,416		)	(24,360		)	12,946
Income tax (expense) benefit	(39		)	(1,782		)	—		(821		)	(327		)	(2,969		)
Net income (loss)	$	(270	)	$	28,729		$	9,442	$	(3,237	)	$	(24,687	)	$	9,977

(1) Includes interest expense for the Convertible Senior Notes of $4.4 million and $13.3 million for the three and nine months ended September 30, 2016 and $4.4 million and $13.0 million for the three and nine months ended September 30, 2015.

(2) Includes interest expense for the Unsecured Junior Subordinated Debentures of $636,000 and $1.9 million for the three and nine months ended September 30, 2016 and $610,000 and $1.8 million for the three and nine months ended September 30, 2015.

(3) Includes general corporate expenses not allocable to any particular operating segment.

(4) Includes impairment on intangible assets in the Commercial Finance segment of $3.7 million for the three and nine months ended September 30, 2016.

The following table presents total assets by segment for the periods indicated (in thousands):

Total Assets (2)	Commercial Real Estate Lending		Commercial Finance		Middle Market Lending		Residential Mortgage Lending		Corporate & Other (1)		Total
September 30, 2016	$	1,685,295	$	129,441	$	60,935	$	256,491	$	25,316	$	2,157,478
December 31, 2015	$	1,907,951	$	298,028	$	384,973	$	149,351	$	20,129	$	2,760,432

(1) Includes assets not allocable to any particular operating segment.

(2) On January 1, 2016, we adopted amendments to the consolidation accounting guidance (see Note 2) and deconsolidated two and three VIEs in the Commercial Real Estate Lending and Commercial Finance operating segments, respectively.

XML

ORGANIZATION AND BASIS OF PRESENTATION (Details) - Entity	1 Months Ended		9 Months Ended
	Jul. 31, 2014	May 31, 2013	Sep. 30, 2016	Sep. 08, 2016	Sep. 30, 2014
Resource America
Variable Interest Entity [Line Items]
Ownership Percentage				2.30%
RREF 2006-1 | RCC Real Estate
Variable Interest Entity [Line Items]
Ownership percentage in VIE			100.00%
Northport TRS, LLC | NEW NP, LLC
Variable Interest Entity [Line Items]
Ownership percentage in VIE			100.00%
Apidos III | RCC Commercial
Variable Interest Entity [Line Items]
Ownership percentage in VIE			100.00%
Apidos Cinco | RCC Commercial II
Variable Interest Entity [Line Items]
Ownership percentage in VIE			100.00%
Whitney CLO I
Variable Interest Entity [Line Items]
Ownership percentage in VIE		68.30%
Whitney CLO I | RCC Commercial II
Variable Interest Entity [Line Items]
Ownership percentage in VIE			68.30%
Moselle | RCC Commercial II
Variable Interest Entity [Line Items]
Ownership percentage in VIE			88.60%
Apidos I | RCC Commercial III
Variable Interest Entity [Line Items]
Ownership percentage in VIE			90.00%
Apidos I | RSO EquityCo, LLC
Variable Interest Entity [Line Items]
Ownership percentage in VIE			10.00%
RREF 2007-1 | RCC Real Estate
Variable Interest Entity [Line Items]
Percentage of outstanding notes purchased			100.00%
RCC CRE Notes 2013 Senior Notes | RCC Real Estate
Variable Interest Entity [Line Items]
Percentage of outstanding notes purchased			100.00%
Resource Capital Corp. 2014-CRE2, Ltd. | RCC Real Estate
Variable Interest Entity [Line Items]
Percentage of outstanding notes purchased			100.00%
RCAM Managed CDOs | Resource TRS II
Variable Interest Entity [Line Items]
Number of CDO issuers			1
Apidos CLO VIII Ltd. | Resource TRS III
Variable Interest Entity [Line Items]
Ownership percentage in VIE			33.00%
Apidos CLO VIII Ltd. | RSO EquityCo, LLC
Variable Interest Entity [Line Items]
Ownership percentage in VIE			10.00%
RCC Resi Portfolio | Long Term Care Conversion Funding
Variable Interest Entity [Line Items]
Ownership percentage in VIE			70.90%
NEW NP, LLC | RCC Commercial
Variable Interest Entity [Line Items]
Ownership percentage in VIE			29.60%
NEW NP, LLC | Resource TRS, LLC
Variable Interest Entity [Line Items]
Ownership percentage in VIE			25.80%
NEW NP, LLC | Resource TRS, Inc
Variable Interest Entity [Line Items]
Ownership percentage in VIE			44.60%
Primary Capital Mortgage LLC | RCC Residential, Inc.
Variable Interest Entity [Line Items]
Ownership percentage in VIE			100.00%
RCM Global, LLC | RCC Residential, Inc.
Variable Interest Entity [Line Items]
Ownership percentage in VIE	63.80%		28.60%
RCC Depositor, LLC | RCC Resi TRS
Variable Interest Entity [Line Items]
Ownership percentage in VIE			100.00%
RCC Opportunities Trust | RCC Depositor, LLC
Variable Interest Entity [Line Items]
Ownership percentage in VIE			100.00%
Resource Capital Corp. 2015-CRE3, Ltd. | RCC Real Estate
Variable Interest Entity [Line Items]
Percentage of outstanding notes purchased			100.00%
RCC 2015-CRE4 | RCC Real Estate
Variable Interest Entity [Line Items]
Percentage of outstanding notes purchased			100.00%
Pelium
Variable Interest Entity [Line Items]
Ownership percentage (percent)			80.20%		80.40%
CVC Capital Partners | Resource America
Variable Interest Entity [Line Items]
Ownership percentage (percent)			24.00%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, $ in Thousands					3 Months Ended		9 Months Ended
		Sep. 30, 2016 USD ($) Entity $ / shares shares	Aug. 31, 2015	Aug. 03, 2015	Sep. 30, 2016 USD ($) Entity $ / shares shares	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Entity $ / shares shares	Sep. 30, 2015 USD ($)	Jan. 01, 2016 Entity	Dec. 31, 2015 USD ($) Entity $ / shares shares
Variable Interest Entity [Line Items]
Common stock, shares authorized (in shares) | shares		125,000,000			125,000,000		125,000,000			125,000,000
Common stock, par value (in dollars per share) | $ / shares		$ 0.001			$ 0.001		$ 0.001			$ 0.001
Preferred stock, shares authorized (in shares) | shares		100,000,000.0			100,000,000.0		100,000,000.0
Cash balance in excess of federal deposit Insurance limit, amount	[1]	$ 111,200			$ 111,200		$ 111,200			$ 74,300
Deferred tax assets		56,500			56,500		56,500
Unrecognized tax benefits		21,900			21,900		21,900
Deferred tax asset, net		15,400
Deferred tax assets, valuation allowance		41,100			41,100		41,100
Income tax expense (benefits), valuation allowance					16,300
Decrease tax benefits		$ 16,300			16,300		16,300
Income tax (expense) benefit					12,283	$ (1,796)	$ 9,558	$ 2,969
Other tax expense (benefit)					$ 4,000
Deconsolidation of variable interest entities										23,851
Stock split, conversion ratio			0.25	4
Preferred stock, par value (in dollars per share) | $ / shares		$ 0.001			$ 0.001		$ 0.001
Accumulated Distributions in Excess of Net Income
Variable Interest Entity [Line Items]
Deconsolidation of variable interest entities										$ 16,932
VIE, Primary Beneficiary
Variable Interest Entity [Line Items]
Number of consolidated VIEs | Entity		7			7		7		5	13

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Variable Interest Entity (Details) $ in Thousands	Sep. 30, 2016 USD ($)	Jan. 01, 2016 USD ($) Loan	Dec. 31, 2015 USD ($)
ASSETS:
Cash and cash equivalents	$ 0		$ 95
Restricted cash	5,473		39,061
Loans, pledged as collateral and net of allowances	0		66,137
Loans held for sale	0		1,475
Investment securities available-for-sale, at fair value	801,742		1,416,441
Interest receivable	3,389		6,592
Principal paydown receivable	44,600		17,800
Prepaid expenses	21		238
Other assets	253		833
Total assets of consolidated VIEs	855,478		1,548,672
LIABILITIES:
Borrowings	528,971		1,032,581
Accrued interest expense	500		923
Derivatives, at fair value	0		3,346
Accounts payable and other liabilities	147		(117)
Total liabilities of consolidated VIEs	529,618		1,036,733
Equity [Abstract]
Specific Allowance	8,059		41,556
Allowance for loan loss	9,433		47,071
Impaired financing receivable, recorded investment	$ 38,133		$ 171,251
Total Deconsolidated VIEs
ASSETS:
Cash and cash equivalents		$ 472
Restricted cash		17,076
Loans, pledged as collateral and net of allowances		364,589
Loans held for sale		1,322
Investment securities available-for-sale, at fair value		68,997
Investment securities, trading		21,851
Investments in deconsolidated entities		17,250
Interest receivable		4,299
Principal paydown receivable		17,800
Prepaid expenses		256
Other assets		972
Total assets of consolidated VIEs		514,884
LIABILITIES:
Borrowings		297,191
Accrued interest expense		297
Derivatives, at fair value		3,346
Accounts payable and other liabilities		255
Total liabilities of consolidated VIEs		301,089
Equity [Abstract]
Retained earnings		206,876
Non-controlling interests		8,876
Accumulated other comprehensive loss		(1,957)
Total equity		213,795
Total liabilities and equity		$ 514,884
Number of impaired loans | Loan		4
Impaired financing receivable, recorded investment		$ 91,300
Retained Interest
ASSETS:
Cash and cash equivalents		0
Restricted cash		0
Loans, pledged as collateral and net of allowances		0
Loans held for sale		0
Investment securities available-for-sale, at fair value		166,769
Investment securities, trading		0
Investments in deconsolidated entities		23,175
Interest receivable		0
Principal paydown receivable		0
Prepaid expenses		0
Other assets		0
Total assets of consolidated VIEs		189,944
LIABILITIES:
Borrowings		0
Accrued interest expense		0
Derivatives, at fair value		0
Accounts payable and other liabilities		0
Total liabilities of consolidated VIEs		0
Equity [Abstract]
Retained earnings		189,944
Non-controlling interests		0
Accumulated other comprehensive loss		0
Total equity		189,944
Total liabilities and equity		189,944
Net Impact on Deconsolidation
ASSETS:
Cash and cash equivalents		472
Restricted cash		17,076
Loans, pledged as collateral and net of allowances		364,589
Loans held for sale		1,322
Investment securities available-for-sale, at fair value		(97,772)
Investment securities, trading		21,851
Investments in deconsolidated entities		(5,925)
Interest receivable		4,299
Principal paydown receivable		17,800
Prepaid expenses		256
Other assets		972
Total assets of consolidated VIEs		324,940
LIABILITIES:
Borrowings		297,191
Accrued interest expense		297
Derivatives, at fair value		3,346
Accounts payable and other liabilities		255
Total liabilities of consolidated VIEs		301,089
Equity [Abstract]
Retained earnings		16,932
Non-controlling interests		8,876
Accumulated other comprehensive loss		(1,957)
Total equity		23,851
Total liabilities and equity		324,940
Apidos Cinco CDO Senior Notes
Equity [Abstract]
Specific Allowance		1,300
RREF CDO 2006-1, CDO 2007-1 Senior Notes
Equity [Abstract]
Specific Allowance		40,300
Commercial Real Estate Loans
Equity [Abstract]
Allowance for loan loss		$ 142

XML

VARIABLE INTEREST ENTITIES (Details) $ in Thousands									1 Months Ended										3 Months Ended			9 Months Ended			12 Months Ended
		Sep. 30, 2016 USD ($) Entity Position party Director		Apr. 25, 2016 USD ($)	Jun. 24, 2015	Feb. 01, 2015 USD ($)	Jul. 09, 2014 USD ($)	Nov. 16, 2011 USD ($) shares	Sep. 30, 2016 USD ($) Entity Position party Director		Jan. 31, 2016 USD ($)	Sep. 30, 2014 USD ($)	Jul. 31, 2014 USD ($)	Feb. 28, 2014 USD ($)	May 31, 2013	Feb. 28, 2013 Entity	Oct. 31, 2012	Feb. 28, 2011 USD ($) Entity	Sep. 30, 2016 USD ($) Entity Position party Director		Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Entity Position party Director		Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) Entity		Dec. 31, 2013 USD ($) shares	Jan. 01, 2016 Entity	Dec. 15, 2015 USD ($)	Apr. 30, 2015 USD ($)
Variable Interest Entity [Line Items]
Number of related parties | party		1							1										1			1
Investments in unconsolidated entities		$ 88,149	[1]						$ 88,149	[1]									$ 88,149	[1]		$ 88,149	[1]		$ 50,030	[1]			$ 1,300	$ 750
Borrowings	[2]	1,401,842							1,401,842										1,401,842			1,401,842			1,895,288
Intangible assets	[1]	$ 25,886							$ 25,886										25,886			25,886			26,228
Fee income																			$ 2,023		$ 781	1,425		$ 4,767
Pearlmark Mezzanine Realty Partners IV, L.P.
Variable Interest Entity [Line Items]
Acquisition of membership interests																						$ 17,800
Ownership percentage (percent)		47.70%							47.70%										47.70%			47.70%
Investments in unconsolidated entities		$ 16,751							$ 16,751										$ 16,751			$ 16,751			6,465
Pelium
Variable Interest Entity [Line Items]
Acquisition of membership interests												$ 17,500
Ownership percentage (percent)		80.20%							80.20%			80.40%							80.20%			80.20%
Payments to acquire additional interest in subsidiaries						$ 2,500
Ownership interest												10.00%
Ownership percentage												5 years
Ownership interest increase		20.00%							20.00%										20.00%			20.00%
Contributions												$ 40,000
Investments in unconsolidated entities		$ 24,767							$ 24,767										$ 24,767			$ 24,767			0
RCC Residential, Inc.
Variable Interest Entity [Line Items]
Acquisition of membership interests													$ 15,000
Payments to acquire businesses and interest in affiliates							$ 23,500
Ownership percentage (percent)							63.80%
Investment in LCC Preferred Stock
Variable Interest Entity [Line Items]
Ownership percentage (percent)		29.00%							29.00%										29.00%			29.00%
Investments in unconsolidated entities		$ 44,777						$ 36,300	$ 44,777										$ 44,777			$ 44,777			42,017
Management Contracts
Variable Interest Entity [Line Items]
Number of CLOs held by purchased entity | Entity																		5
Acquisition																		$ 22,500
Fee income																			553		$ 791	$ 1,500		$ 2,700
Impairment of intangible assets									1,500		$ 2,400								$ 1,500						$ 2,400
Investment in RCAM, Investment Two
Variable Interest Entity [Line Items]
Impairment of intangible assets									$ 2,200
VIE, Primary Beneficiary
Variable Interest Entity [Line Items]
Number of consolidated VIEs | Entity		7							7										7			7			13			5
VIE, Primary Beneficiary | Moselle
Variable Interest Entity [Line Items]
Acquisition of membership interests														$ 30,400
VIE, Primary Beneficiary | Management Contracts
Variable Interest Entity [Line Items]
Preferred equity interest acquired																	66.60%
VIE, Primary Beneficiary | Whitney CLO I
Variable Interest Entity [Line Items]
Percentage of outstanding notes purchased															68.30%
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Investments in unconsolidated entities		$ 88,149							$ 88,149										$ 88,149			$ 88,149
Variable Interest Entity, Not Primary Beneficiary | Pelium
Variable Interest Entity [Line Items]
Investment maximum		$ 3,000							3,000										3,000			$ 3,000
Variable Interest Entity, Not Primary Beneficiary | LCC
Variable Interest Entity [Line Items]
Ownership percentage in VIE		29.00%						26.70%
Preferred stock, coupon authorized (in hundredths)																						8.00%
Investments in unconsolidated entities		$ 44,800							$ 44,800										$ 44,800			$ 44,800			$ 42,000
Variable interest entity, number of board positions held by the company | Position		2							2										2			2
Variable interest entity, total number of board positions | Position		6							6										6			6
Investments in unconsolidated entities		$ 44,777							$ 44,777										$ 44,777			$ 44,777
Variable Interest Entity, Not Primary Beneficiary | LCC | Preferred Shares - Series A
Variable Interest Entity [Line Items]
Acquisition of membership interests																											$ 3,700
Shares received in equity method transaction (in shares) | shares								31,341
Variable Interest Entity, Not Primary Beneficiary | LCC | Preferred Shares - Series B
Variable Interest Entity [Line Items]
Shares received in equity method transaction (in shares) | shares								4,872
Variable Interest Entity, Not Primary Beneficiary | LCC | Series D Preferred Stock
Variable Interest Entity [Line Items]
Shares received in equity method transaction (in shares) | shares								2,364
Variable Interest Entity, Not Primary Beneficiary | LCC | Series A1 Preferred Stock
Variable Interest Entity [Line Items]
Shares received in equity method transaction (in shares) | shares																											3,682
Variable Interest Entity, Not Primary Beneficiary | LCC | Series E Preferred Stock
Variable Interest Entity [Line Items]
Acquisition of membership interests																											$ 4,400
Shares received in equity method transaction (in shares) | shares																											4,445
Variable Interest Entity, Not Primary Beneficiary | Investment in RCT I and II
Variable Interest Entity [Line Items]
Ownership percentage in VIE																						100.00%
Investments in unconsolidated entities		$ 1,500							$ 1,500										$ 1,500			$ 1,500
Variable Interest Entity, Not Primary Beneficiary | Interest in RCT I
Variable Interest Entity [Line Items]
Percentage of total value of trusts owned		3.00%							3.00%										3.00%			3.00%
Borrowings		$ 25,800							$ 25,800										$ 25,800			$ 25,800
Variable Interest Entity, Not Primary Beneficiary | Interest in RCT II
Variable Interest Entity [Line Items]
Percentage of total value of trusts owned		3.00%							3.00%										3.00%			3.00%
Borrowings		$ 25,800							$ 25,800										$ 25,800			$ 25,800
Variable Interest Entity, Not Primary Beneficiary | Management Contracts
Variable Interest Entity [Line Items]
Number of CLOs held by purchased entity | Entity																		4
Number of CLOs liquidated | Entity									1							1
Variable Interest Entity, Not Primary Beneficiary | Investment in ZAIS CLO
Variable Interest Entity [Line Items]
Investments in unconsolidated entities		10,600							$ 10,600										10,600			10,600
Investment maximum		10,000							10,000										10,000			10,000
Investments in unconsolidated entities		0							0										0			0
Variable Interest Entity, Not Primary Beneficiary | Harvest CLO XV
Variable Interest Entity [Line Items]
Investments in unconsolidated entities		14,000							14,000										14,000			14,000
Variable Interest Entity, Not Primary Beneficiary | Harvest CLO VII Limited
Variable Interest Entity [Line Items]
Investments in unconsolidated entities		4,400							4,400										4,400			4,400
Variable Interest Entity, Not Primary Beneficiary | Harvest CLO VIII Limited
Variable Interest Entity [Line Items]
Investments in unconsolidated entities		$ 5,200							$ 5,200										$ 5,200			$ 5,200
Class 1 Subordinated Notes | Moselle CLO S.A. Senior Notes
Variable Interest Entity [Line Items]
Percentage of outstanding notes purchased														100.00%
Class 2 Subordinated Notes | Moselle CLO S.A. Senior Notes
Variable Interest Entity [Line Items]
Percentage of outstanding notes purchased														67.90%
Resource America
Variable Interest Entity [Line Items]
Payments to acquire additional interest in subsidiaries												$ 2,800
RCC Residential, Inc. | RCM Global, LLC
Variable Interest Entity [Line Items]
Ownership percentage in VIE													63.80%									28.60%
Variable interest entity, total number of board positions | Director		5							5										5			5
Management Contracts
Variable Interest Entity [Line Items]
Intangible assets		$ 512							$ 512										$ 512			$ 512			$ 5,300
RREF 2006-1
Variable Interest Entity [Line Items]
Value of Collateral				$ 65,600
Debt instrument, collateral amount				7,500
Gain on liquidation				$ 846
Resource America | Pearlmark Mezzanine Realty Partners IV, L.P.
Variable Interest Entity [Line Items]
Ownership percentage in VIE					50.00%

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

[2] September 30, 2016 December 31, 2015Liabilities of consolidated VIEs included in the total liabilities above: Borrowings $528,971 $1,032,581 Accrued interest expense500 923 Derivatives, at fair value— 3,346 Accounts payable and other liabilities147 (117) Total liabilities of consolidated VIEs$529,618 $1,036,733

XML

VARIABLE INTEREST ENTITIES (Schedule of Carrying Value of Assets and Liabilities of Consolidated VIEs) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
ASSETS:
Restricted cash	$ 5,473	$ 39,061
Loans held for investment	801,742	1,416,441
Interest receivable	3,389	6,592
Prepaid assets	21	238
Principal paydown receivable	44,600	17,800
Other assets	253	833
Total assets of consolidated VIEs	855,478	1,548,672
LIABILITIES
Borrowings	528,971	1,032,581
Accrued interest expense	500	923
Accounts payable and other liabilities	147	(117)
Total liabilities of consolidated VIEs	529,618	$ 1,036,733
VIE, Primary Beneficiary
ASSETS:
Restricted cash	5,473
Loans held for investment	801,742
Interest receivable	3,389
Prepaid assets	21
Principal paydown receivable	44,600
Other assets	253
Total assets of consolidated VIEs	855,478
LIABILITIES
Borrowings	528,971
Accrued interest expense	500
Accounts payable and other liabilities	147
Total liabilities of consolidated VIEs	529,618
Restricted cash available for reinvestment in certain of the CDOs	2,900
Apidos I | VIE, Primary Beneficiary
ASSETS:
Restricted cash	280
Loans held for investment	0
Interest receivable	0
Prepaid assets	0
Principal paydown receivable	0
Other assets	0
Total assets of consolidated VIEs	280
LIABILITIES
Borrowings	0
Accrued interest expense	0
Accounts payable and other liabilities	0
Total liabilities of consolidated VIEs	0
Apidos III | VIE, Primary Beneficiary
ASSETS:
Restricted cash	153
Loans held for investment	0
Interest receivable	0
Prepaid assets	0
Principal paydown receivable	0
Other assets	0
Total assets of consolidated VIEs	153
LIABILITIES
Borrowings	0
Accrued interest expense	0
Accounts payable and other liabilities	0
Total liabilities of consolidated VIEs	0
Whitney CLO I | VIE, Primary Beneficiary
ASSETS:
Restricted cash	153
Loans held for investment	0
Interest receivable	0
Prepaid assets	0
Principal paydown receivable	0
Other assets	0
Total assets of consolidated VIEs	153
LIABILITIES
Borrowings	0
Accrued interest expense	0
Accounts payable and other liabilities	0
Total liabilities of consolidated VIEs	0
RCC CRE Notes 2013 Senior Notes | VIE, Primary Beneficiary
ASSETS:
Restricted cash	0
Loans held for investment	26,605
Interest receivable	292
Prepaid assets	6
Principal paydown receivable	36,600
Other assets	208
Total assets of consolidated VIEs	63,711
LIABILITIES
Borrowings	16,179
Accrued interest expense	25
Accounts payable and other liabilities	33
Total liabilities of consolidated VIEs	16,237
RCC 2014-CRE2 Senior Notes | VIE, Primary Beneficiary
ASSETS:
Restricted cash	0
Loans held for investment	255,744
Interest receivable	1,003
Prepaid assets	5
Principal paydown receivable	0
Other assets	0
Total assets of consolidated VIEs	256,752
LIABILITIES
Borrowings	135,857
Accrued interest expense	107
Accounts payable and other liabilities	10
Total liabilities of consolidated VIEs	135,974
RCC 2015-CRE3 | VIE, Primary Beneficiary
ASSETS:
Restricted cash	2,000
Loans held for investment	258,881
Interest receivable	1,117
Prepaid assets	5
Principal paydown receivable	8,000
Other assets	45
Total assets of consolidated VIEs	270,048
LIABILITIES
Borrowings	203,482
Accrued interest expense	209
Accounts payable and other liabilities	53
Total liabilities of consolidated VIEs	203,744
RCC 2015-CRE4 | VIE, Primary Beneficiary
ASSETS:
Restricted cash	2,887
Loans held for investment	260,512
Interest receivable	977
Prepaid assets	5
Principal paydown receivable	0
Other assets	0
Total assets of consolidated VIEs	264,381
LIABILITIES
Borrowings	173,453
Accrued interest expense	159
Accounts payable and other liabilities	51
Total liabilities of consolidated VIEs	$ 173,663

XML

VARIABLE INTEREST ENTITIES (Schedule of Classification, Carrying Value, and Maximum Exposure to Loss of Unconsolidated VIEs) (Details) - Variable Interest Entity, Not Primary Beneficiary $ in Thousands	Sep. 30, 2016 USD ($)
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	$ 88,149
Intangible assets	512
Total assets	237,235
Borrowings	51,548
Total liabilities	51,548
Net asset (liability)	185,687
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	148,574
Investments in Unconsolidated Entities
Variable Interest Entity [Line Items]
Maximum Exposure to Loss	88,149
Available-for-sale Securities
Variable Interest Entity [Line Items]
Maximum Exposure to Loss	148,574
Intangible Assets
Variable Interest Entity [Line Items]
Maximum Exposure to Loss	512
LCC
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	44,777
Intangible assets	0
Total assets	44,777
Borrowings	0
Total liabilities	0
Net asset (liability)	44,777
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	0
Unsecured Junior Subordinated Debentures
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	1,548
Intangible assets	0
Total assets	1,548
Borrowings	51,548
Total liabilities	51,548
Net asset (liability)	(50,000)
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	0
RCAM Managed CDOs
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	0
Intangible assets	512
Total assets	512
Borrowings	0
Total liabilities	0
Net asset (liability)	512
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	0
Investment in ZAIS CLO
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	0
Intangible assets	0
Total assets	10,619
Net asset (liability)	10,619
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	10,619
Investment in Harvest CLOs
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	0
Intangible assets	0
Total assets	23,590
Borrowings	0
Total liabilities	0
Net asset (liability)	23,590
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	23,590
RREF CDO 2007-1 Senior Notes
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	0
Intangible assets	0
Total assets	94,353
Borrowings	0
Total liabilities	0
Net asset (liability)	94,353
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	94,353
Apidos Cinco CDO Senior Notes
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	0
Intangible assets	0
Total assets	20,012
Borrowings	0
Total liabilities	0
Net asset (liability)	20,012
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	20,012
RCM Global, LLC
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	306
Intangible assets	0
Total assets	306
Borrowings	0
Total liabilities	0
Net asset (liability)	306
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	0
Pelium Capital
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	24,767
Intangible assets	0
Total assets	24,767
Borrowings	0
Total liabilities	0
Net asset (liability)	24,767
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	0
Pearlmark Mezzanine Realty Partners IV, L.P.
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	16,751
Intangible assets	0
Total assets	16,751
Borrowings	0
Total liabilities	0
Net asset (liability)	16,751
Variable Interest Entity, Nonconsolidated, Carrying Amount, Investment Securities Available-for-sale	$ 0

XML

SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Non-cash operating activities include the following:
Reclassification of linked transactions, net at fair value to investment securities available-for-sale, pledged as collateral, at fair value and borrowings				$ 0	$ 15,367
Interest expense paid by third party (2)		$ 14,120	$ 16,330	46,581	45,334
Operating liabilities assumed by third party (2)	[1]	(1,438,919)		(1,438,919)		$ (1,933,672)
Non-cash investing activities include the following:
Reclassification of linked transactions, net at fair value to investment securities available-for-sale, pledged as collateral, at fair value				0	48,764
Retained beneficial interest in unconsolidated securitization entities				(22,476)	0
Loans acquired through collateralized debt obligation liquidation				(44,893)	0
Securities acquired through collateralized debt obligation liquidation				(20,837)	0
Non-cash financing activities include the following:
Reclassification of linked transactions, net at fair value to borrowings				0	33,397
Senior secured revolving credit facility assumed by third party (2)				122,000	0
Senior secured revolving credit facility paid down by third party (2)				(22,000)	0
Common Stock
Non-cash financing activities include the following:
Distributions on common and preferred stock declared but not paid		13,012	20,667	13,012	20,667
Preferred Stock
Non-cash financing activities include the following:
Distributions on common and preferred stock declared but not paid		4,010	4,077	4,010	4,077
Interest expense paid by third party (2)
Non-cash operating activities include the following:
Interest expense paid by third party (2)				107	0
Operating liabilities assumed by third party (2)
Non-cash operating activities include the following:
Operating liabilities assumed by third party (2)		$ (192)	$ 0	$ (192)	$ 0

[1] September 30, 2016 December 31, 2015Liabilities of consolidated VIEs included in the total liabilities above: Borrowings $528,971 $1,032,581 Accrued interest expense500 923 Derivatives, at fair value— 3,346 Accounts payable and other liabilities147 (117) Total liabilities of consolidated VIEs$529,618 $1,036,733

XML

INVESTMENT SECURITIES TRADING (Schedule of Investment Trading Securities at Fair Value) (Details) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized Cost		$ 5,914	$ 30,472
Unrealized Gains		419	1,674
Unrealized Losses		(2,586)	(6,596)
Fair Value	[1]	3,747	25,550
Structured notes
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized Cost		5,914	28,576
Unrealized Gains		419	1,674
Unrealized Losses		(2,586)	(4,700)
Fair Value		$ 3,747	25,550
RMBS
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized Cost			1,896
Unrealized Gains			0
Unrealized Losses			(1,896)
Fair Value			$ 0

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

INVESTMENT SECURITIES TRADING (Details) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016 USD ($) Security	Sep. 30, 2015 USD ($) Security	Sep. 30, 2016 USD ($) Security	Sep. 30, 2015 USD ($) Security	Jan. 01, 2016 USD ($)	Dec. 31, 2015 USD ($) Security
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, trading	[1]	$ 3,747		$ 3,747			$ 25,550
Trading securities, number sold | Security		0	9	0	19
Trading securities, realized gain			$ 750		$ 1,400
Number of trading securities held | Security		6		6			56
Pelium
Schedule of Trading Securities and Other Trading Assets [Line Items]
Investment securities, trading						$ 21,900

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Schedule of Available-for-Sale Securities, Fair Value) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 233,539	$ 205,156
Unrealized Gains	4,626	5,971
Unrealized Losses	(1,460)	(3,039)
Fair Value	236,705	208,088
ABS
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	149,320	41,994
Unrealized Gains	3,975	3,218
Unrealized Losses	(149)	(998)
Fair Value	153,146	44,214
CMBS
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	82,595	158,584
Unrealized Gains	477	2,631
Unrealized Losses	(1,311)	(1,791)
Fair Value	81,761	159,424
RMBS
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,624	2,156
Unrealized Gains	174	122
Unrealized Losses	0	(88)
Fair Value	$ 1,798	2,190
Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		2,422
Unrealized Gains		0
Unrealized Losses		(162)
Fair Value		$ 2,260

XML

INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Estimated Maturities of Available-For-Sale Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value
Less than one year	$ 178,357	$ 117,221
Greater than one year and less than five years	15,886	71,370
Greater than five years and less than ten years	25,289	12,382
Greater than ten years	17,173	7,115
Total	236,705	208,088
Amortized Cost
Less than one year	179,516	118,215
Greater than one year and less than five years	15,489	68,808
Greater than five years and less than ten years	22,477	11,271
Greater than ten years	16,057	6,862
Total	$ 233,539	$ 205,156
Weighted Average Coupon
Less than one year	6.29%	7.13%
Greater than one year and less than five years	4.27%	5.31%
Greater than five years and less than ten years	9.98%	10.45%
Greater than ten years	8.74%	16.85%
Total	6.68%	7.03%

XML

INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Gross Unrealized Loss and Fair Value of Securities) (Details) $ in Thousands	Sep. 30, 2016 USD ($) Security	Dec. 31, 2015 USD ($) Security
Schedule of Available-for-sale Securities [Line Items]
Fair Value, less than 12 months	$ 38,864	$ 83,122
Unrealized Losses, less than 12 months	$ (1,097)	$ (1,779)
Number of Securities, less than 12 months | Security	19	39
Fair value, more than 12 months	$ 13,977	$ 15,778
Unrealized losses, more than 12 Months	$ (363)	$ (1,260)
Number of Securities, more than 12 Months | Security	6	21
Fair value, total	$ 52,841	$ 98,900
Unrealized losses, total	$ (1,460)	$ (3,039)
Number of Securities, total | Security	25	60
ABS
Schedule of Available-for-sale Securities [Line Items]
Fair Value, less than 12 months	$ 1,066	$ 2,330
Unrealized Losses, less than 12 months	$ (147)	$ (824)
Number of Securities, less than 12 months | Security	2	5
Fair value, more than 12 months	$ 40	$ 668
Unrealized losses, more than 12 Months	$ (2)	$ (174)
Number of Securities, more than 12 Months | Security	1	5
Fair value, total	$ 1,106	$ 2,998
Unrealized losses, total	$ (149)	$ (998)
Number of Securities, total | Security	3	10
CMBS
Schedule of Available-for-sale Securities [Line Items]
Fair Value, less than 12 months	$ 37,798	$ 79,570
Unrealized Losses, less than 12 months	$ (950)	$ (849)
Number of Securities, less than 12 months | Security	17	31
Fair value, more than 12 months	$ 13,937	$ 13,783
Unrealized losses, more than 12 Months	$ (361)	$ (942)
Number of Securities, more than 12 Months | Security	5	15
Fair value, total	$ 51,735	$ 93,353
Unrealized losses, total	$ (1,311)	$ (1,791)
Number of Securities, total | Security	22	46
RMBS
Schedule of Available-for-sale Securities [Line Items]
Fair Value, less than 12 months	$ 0	$ 1,157
Unrealized Losses, less than 12 months	$ 0	$ (88)
Number of Securities, less than 12 months | Security	0	2
Fair value, more than 12 months	$ 0	$ 0
Unrealized losses, more than 12 Months	$ 0	$ 0
Number of Securities, more than 12 Months | Security	0	0
Fair value, total	$ 0	$ 1,157
Unrealized losses, total	$ 0	$ (88)
Number of Securities, total | Security	0	2
Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Value, less than 12 months		$ 65
Unrealized Losses, less than 12 months		$ (18)
Number of Securities, less than 12 months | Security		1
Fair value, more than 12 months		$ 1,327
Unrealized losses, more than 12 Months		$ (144)
Number of Securities, more than 12 Months | Security		1
Fair value, total		$ 1,392
Unrealized losses, total		$ (162)
Number of Securities, total | Security		2

XML

INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Summary of Sales of Investment Securities Available-for-Sale) (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015 USD ($) Security	Sep. 30, 2016 Security	Sep. 30, 2015 USD ($) Security
ABS
Schedule of Available-for-sale Securities [Line Items]
Positions Sold | Security	8	0	15
Positions Redeemed | Security	0		3
Par Amount Sold/Redeemed | $	$ 15,462		$ 31,399
Realized Gain (Loss) | $	$ 2,437		$ 10,547
RMBS
Schedule of Available-for-sale Securities [Line Items]
Positions Sold | Security	0		6
Positions Redeemed | Security	0		0
Par Amount Sold/Redeemed | $	$ 0		$ 28,305
Realized Gain (Loss) | $	$ 0		$ 984

XML

INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Narrative) (Details)			3 Months Ended		9 Months Ended
		Sep. 30, 2016 USD ($) Loan Security	Sep. 30, 2016 USD ($) Loan Security	Sep. 30, 2015 USD ($) Security	Sep. 30, 2016 USD ($) Loan Security	Sep. 30, 2015 USD ($) Security	Jan. 01, 2016 USD ($)	Dec. 31, 2015 USD ($)
Variable Interest Entity [Line Items]
Other than temporary impairment losses			$ 21,600,000	$ 0	$ 21,600,000	$ 0
Trading securities, number sold | Security			0	9	0	19
Investment securities available-for-sale, pledged as collateral, at fair value	[1]	$ 82,114,000	$ 82,114,000		$ 82,114,000			$ 162,306,000
Investment securities available-for-sale, pledged as collateral, at fair value		$ 0	0		0			$ 66,137,000
VIE, Primary Beneficiary
Variable Interest Entity [Line Items]
Investment securities available-for-sale, pledged as collateral, at fair value							$ 364,600,000
RMBS
Variable Interest Entity [Line Items]
Other than temporary impairment losses, investments			$ 241,000		$ 241,000
Number of Impaired Securities | Security		3	3		3
Number of investment securities available for sale sold | Security				0		6
CMBS
Variable Interest Entity [Line Items]
Trading securities, number sold | Security		12
Intended for sale, number of securities | Security		1	1		1
Available-for-sale Securities, at par			$ 4,000,000.0
Other than temporary impairment losses, investments			$ 732,000		$ 732,000
Commercial Real Estate Lending
Variable Interest Entity [Line Items]
Number of loans | Loan		7	7		7
Number of loans, appraisals | Loan		6	6		6
Number of impaired loans | Loan		2	2		2
ABS
Variable Interest Entity [Line Items]
Number of investment securities available for sale sold | Security				8	0	15
RREF CDO 2007-1 Senior Notes | Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Other than temporary impairment losses					$ 20,700,000

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

LOANS (Summary of Loans) (Details)	Sep. 30, 2016 USD ($) Loan	Apr. 25, 2016 USD ($)	Jan. 01, 2016 USD ($)	Dec. 31, 2015 USD ($) Loan	Aug. 04, 2015 USD ($)
Receivables with Imputed Interest [Line Items]
Principal, gross	$ 1,423,140,000			$ 2,219,369,000
Unamortized (Discount) Premium, net	(7,126,000)			(11,547,000)
Gross carrying value of loans held for investment	1,416,014,000			2,207,822,000
Allowance for loan loss	(9,433,000)			(47,071,000)
Unamortized (discount) premium, gross, allowance for loan loss	0			0
Carrying value, allowance for loan loss	(9,433,000)			(47,071,000)
Principal, Net	1,413,707,000			2,172,298,000
Unamortized (discount) premium, Loans Held for Investment, net	(7,126,000)			(11,547,000)
Net carrying value of loans held for investment	1,406,581,000			2,160,751,000
First lien loans held for sale at fair value	197,615,000			95,946,000
Unamortized (discount) premium, Loans Held for Sale	0			0
Loans Receivable, Net	197,615,000			95,946,000
Loans held for investment and held for sale	1,611,322,000			2,268,244,000
Unamortized (discount) premium, net	(7,126,000)			(11,547,000)
Loans held for investment and held for sale, net carrying value	1,604,196,000			2,256,697,000
Deferred amendment fees	$ 12,000			$ 42,000
Number of defaulted loans | Loan	1			1
CRE whole loans
Receivables with Imputed Interest [Line Items]
Principal, gross	$ 1,367,998,000
Unamortized (Discount) Premium, net	(6,815,000)
Gross carrying value of loans held for investment	1,361,183,000
Mezzanine loans
Receivables with Imputed Interest [Line Items]
Principal, gross	0
Unamortized (Discount) Premium, net	0
Gross carrying value of loans held for investment	0
Bank Loans
Receivables with Imputed Interest [Line Items]
Principal, gross			$ 134,500,000	$ 134,890,000
Unamortized (Discount) Premium, net				(373,000)
Gross carrying value of loans held for investment				134,517,000
Allowance for loan loss			(41,700,000)
First lien loans held for sale at fair value				1,475,000
Deferred upfront fee				12,000
Middle Market Loans
Receivables with Imputed Interest [Line Items]
Principal, gross	51,850,000			380,687,000
Unamortized (Discount) Premium, net	(311,000)			(1,235,000)
Gross carrying value of loans held for investment	51,539,000			379,452,000
First lien loans held for sale at fair value	7,182,000				$ 257,300,000
Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Principal, gross	3,292,000			1,746,000
Unamortized (Discount) Premium, net	0			0
Gross carrying value of loans held for investment	3,292,000			1,746,000
Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Unamortized (Discount) Premium, net	0			0
First lien loans held for sale at fair value	190,433,000			94,471,000
Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Principal, gross				1,702,046,000
Unamortized (Discount) Premium, net				(9,939,000)
Gross carrying value of loans held for investment				1,692,107,000
Loan origination fees	6,700,000			9,900,000
Commercial Real Estate Lending | CRE whole loans
Receivables with Imputed Interest [Line Items]
Principal, gross			$ 271,800,000	1,640,744,000
Unamortized (Discount) Premium, net				(9,943,000)
Gross carrying value of loans held for investment				1,630,801,000
Commercial Real Estate Lending | B notes
Receivables with Imputed Interest [Line Items]
Principal, gross				15,934,000
Unamortized (Discount) Premium, net				0
Gross carrying value of loans held for investment				15,934,000
Commercial Real Estate Lending | Mezzanine loans
Receivables with Imputed Interest [Line Items]
Principal, gross				45,368,000
Unamortized (Discount) Premium, net				4,000
Gross carrying value of loans held for investment				$ 45,372,000
RREF CDO 2006-1 Senior Notes | Variable Interest Entity, Not Primary Beneficiary
Receivables with Imputed Interest [Line Items]
Value of Collateral	0
Debt instrument, par value	$ 28,800,000	$ 28,800,000

XML

LOANS (Commercial Real Estate Loans Held for Investment) (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($) Loan	Dec. 31, 2015 USD ($) Loan	Apr. 25, 2016 USD ($)	Jan. 01, 2016 USD ($)
Receivables with Imputed Interest [Line Items]
Allowance for loan loss	$ 9,433,000	$ 47,071,000
Individually evaluated for impairment	8,524,000	42,021,000
Principal, gross	$ 1,423,140,000	$ 2,219,369,000
Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Quantity | Loan	77	90
Amortized Cost	$ 1,361,183,000	$ 1,692,107,000
Allowance for loan loss		1,300,000
Principal, gross		1,702,046,000
Whole Loans, Floating Rate
Receivables with Imputed Interest [Line Items]
Loans held for investment, unfunded loan commitments	$ 67,300,000	$ 112,600,000
Whole Loans, Floating Rate | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Quantity | Loan	76	87
Amortized Cost	$ 1,361,183,000	$ 1,630,801,000
Quantity of Loans, Fixed Contractual Interest in Floating Rate Whole Loan, Rate One | Loan	4
The amortized cost of loans held for investments, fixed rate whole loans included in floating rate whole loans.	$ 4,500,000	$ 4,500,000
B notes, fixed rate | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Quantity | Loan		1
Amortized Cost		$ 15,934,000
Stated interest rate		8.68%
Maturity dates		April 2016
Mezzanine Loans, Fixed Rate
Receivables with Imputed Interest [Line Items]
Quantity | Loan		1
Mezzanine Loans, Fixed Rate | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Quantity | Loan		2
Amortized Cost		$ 45,372,000
Stated interest rate		9.01%
Maturity dates	September 2016
CRE whole loans
Receivables with Imputed Interest [Line Items]
Allowance for loan loss	$ 9,422,000	$ 3,745,000
Principal, gross	1,367,998,000
CRE whole loans | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Amortized Cost	1,361,183,000	1,630,801,000
Principal, gross		1,640,744,000		$ 271,800,000
Preferred equity tranche
Receivables with Imputed Interest [Line Items]
Amortized Cost	$ 799,000	$ 799,000
Preferred equity tranche | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Fixed preferred equity interest in floating rate whole loan	10.00%	10.00%
Mezzanine loans
Receivables with Imputed Interest [Line Items]
Allowance for loan loss	$ 0	$ 38,079,000
Principal, gross	$ 0
Mezzanine loans | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Quantity | Loan	1
Amortized Cost	$ 0	45,372,000
Principal, gross		45,368,000
Not included in total
Receivables with Imputed Interest [Line Items]
Allowance for loan loss	9,400,000	41,800,000
Whole Loans, Floating Rate, Modification | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Amortized Cost	$ 2,000,000	$ 32,500,000
Minimum | Whole Loans, Floating Rate | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Maturity dates	January 2015	March 2014
Basis spread on variable rate	2.50%	1.75%
Minimum | CRE whole loans | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Fixed contractual interest in floating rate whole loan, Rate Two	1.50%	1.40%
Minimum | Whole Loans, Floating Rate, Modification | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Basis spread on variable rate	1.00%	1.00%
Maximum | Whole Loans, Floating Rate | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Maturity dates	April 2019	February 2019
Basis spread on variable rate	6.45%	12.00%
Maximum | CRE whole loans | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Fixed contractual interest in floating rate whole loan, Rate Two	5.20%	5.20%
Senior Component | Whole Loans, Floating Rate | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Quantity of Loans, Fixed Contractual Interest in Floating Rate Whole Loan, Rate One | Loan	2
The amortized cost of loans held for investments, fixed rate whole loans included in floating rate whole loans.	$ 11,200,000	$ 51,200,000
Senior Component | CRE whole loans | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Fixed contractual interest in floating rate whole loan	0.50%	0.50%
Mezzanine loans
Receivables with Imputed Interest [Line Items]
Individually evaluated for impairment		$ 38,100,000
RREF CDO 2006-1 Senior Notes | Variable Interest Entity, Not Primary Beneficiary
Receivables with Imputed Interest [Line Items]
Debt instrument, par value	$ 28,800,000		$ 28,800,000
Value of Collateral	$ 0

XML

LOANS (Weighted Average Life of Commercial Real Estate Loans, at Amortized Cost) (Details) $ in Thousands	Sep. 30, 2016 USD ($) Loan	Apr. 25, 2016 USD ($)	Dec. 31, 2015 USD ($)
Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
2016	$ 0		$ 38,903
2017	44,770		140,712
2018 and Thereafter	1,316,413		1,512,492
Total	1,361,183		1,692,107
Commercial Real Estate Lending | B notes
Receivables with Imputed Interest [Line Items]
2016			15,934
2017			0
2018 and Thereafter			0
Total			15,934
Commercial Real Estate Lending | Mezzanine loans
Receivables with Imputed Interest [Line Items]
2016	0		13,011
2017	0		0
2018 and Thereafter	0		32,361
Total	0		45,372
Commercial Real Estate Lending | CRE whole loans
Receivables with Imputed Interest [Line Items]
2016	0		9,958
2017	44,770		140,712
2018 and Thereafter	1,316,413		1,480,131
Total	$ 1,361,183		$ 1,630,801
Variable Interest Entity, Not Primary Beneficiary | RREF CDO 2006-1 Senior Notes
Receivables with Imputed Interest [Line Items]
Number of loans | Loan	1
Debt instrument, par value	$ 28,800	$ 28,800

XML

LOANS (Weighted Average Life of Middle-Market and Bank Loans, at Amortized Cost) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Middle Market Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less than one year	$ 0	$ 14,960
Greater than one year and less than five years	20,274	250,709
Five years or greater	38,447	109,844
Total	$ 58,721	375,513
Bank Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less than one year		3,922
Greater than one year and less than five years		128,480
Five years or greater		3,590
Total		$ 135,992

XML

LOANS (Loan Held for Investment) (Details)	Sep. 30, 2016	Dec. 31, 2015
Middle Market Loans | Industry Grouping of Diversified/conglomerate Service
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk (in hundredths)		12.80%
Middle Market Loans | Industry Grouping of Healthcare, Education and Childcare
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk (in hundredths)	16.80%	12.40%
Residential Mortgage Loans | CALIFORNIA
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk (in hundredths)	16.50%
Residential Mortgage Loans | GEORGIA
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk (in hundredths)	39.50%	44.90%
Residential Mortgage Loans | VIRGINIA
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk (in hundredths)	5.90%	9.10%
Residential Mortgage Loans | FLORIDA
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk (in hundredths)	5.40%	4.40%
Residential Mortgage Loans | UTAH
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk (in hundredths)	14.90%	11.20%
Residential Mortgage Loans | COLORADO
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk (in hundredths)		4.10%

XML

LOANS (Lien position and status of our bank and middle market loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Related Party Transaction [Line Items]
First lien loans held for sale at fair value	$ 197,615	$ 95,946
Total		135,992
Apidos I
Related Party Transaction [Line Items]
Total		153
Apidos Cinco
Related Party Transaction [Line Items]
Total		135,839
First lien loans
Related Party Transaction [Line Items]
First lien loans held for sale at fair value		1,475
First lien loans | Apidos I
Related Party Transaction [Line Items]
First lien loans held for sale at fair value		153
First lien loans | Apidos Cinco
Related Party Transaction [Line Items]
First lien loans held for sale at fair value		1,322
Commercial Real Estate Loans
Related Party Transaction [Line Items]
Total		134,517
Commercial Real Estate Loans | Apidos I
Related Party Transaction [Line Items]
Total		0
Commercial Real Estate Loans | Apidos Cinco
Related Party Transaction [Line Items]
Total		134,517
Commercial Real Estate Loans | First lien loans
Related Party Transaction [Line Items]
Total		131,281
Commercial Real Estate Loans | First lien loans | Apidos I
Related Party Transaction [Line Items]
Total		0
Commercial Real Estate Loans | First lien loans | Apidos Cinco
Related Party Transaction [Line Items]
Total		131,281
Commercial Real Estate Loans | Second lien loans
Related Party Transaction [Line Items]
Total		1,692
Commercial Real Estate Loans | Second lien loans | Apidos I
Related Party Transaction [Line Items]
Total		0
Commercial Real Estate Loans | Second lien loans | Apidos Cinco
Related Party Transaction [Line Items]
Total		1,692
Commercial Real Estate Loans | Defaulted first lien loans
Related Party Transaction [Line Items]
Total		1,544
Commercial Real Estate Loans | Defaulted first lien loans | Apidos I
Related Party Transaction [Line Items]
Total		0
Commercial Real Estate Loans | Defaulted first lien loans | Apidos Cinco
Related Party Transaction [Line Items]
Total		1,544
Commercial Real Estate Loans | Defaulted second lien loans
Related Party Transaction [Line Items]
Total		0
Commercial Real Estate Loans | Defaulted second lien loans | Apidos I
Related Party Transaction [Line Items]
Total		0
Commercial Real Estate Loans | Defaulted second lien loans | Apidos Cinco
Related Party Transaction [Line Items]
Total		$ 0

XML

LOANS (Loans Held for Investment, Middle-Market Loans) (Details) - Middle Market Loans - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Loans held for investment, amortized cost	$ 58,721	$ 375,513
First Lien
Financing Receivable, Impaired [Line Items]
Loans held for investment, amortized cost	0	248,367
Second Lien
Financing Receivable, Impaired [Line Items]
Loans held for investment, amortized cost	51,539	127,146
First lien loans held for sale, at fair value - defaulted
Financing Receivable, Impaired [Line Items]
Loans held for investment, amortized cost	4,625	0
Second lien loans held for sale, at fair value
Financing Receivable, Impaired [Line Items]
Loans held for investment, amortized cost	$ 2,557	$ 0

XML

LOANS (Allocation of Allowance for Loan Loss for Commercial and Bank Loans) (Details) - USD ($)	Sep. 30, 2016	Apr. 25, 2016	Jan. 01, 2016	Dec. 31, 2015
Receivables with Imputed Interest [Line Items]
Principal, gross	$ 1,423,140,000			$ 2,219,369,000
Allowance for Loan Loss	9,433,000			47,071,000
Loans acquired with deteriorated credit quality	9,433,000			47,071,000
B notes
Receivables with Imputed Interest [Line Items]
Allowance for Loan Loss				$ 15,000
Percentage of Total Allowance				0.03%
Mezzanine loans
Receivables with Imputed Interest [Line Items]
Principal, gross	0
Allowance for Loan Loss	$ 0			$ 38,079,000
Percentage of Total Allowance	0.00%			80.90%
CRE whole loans
Receivables with Imputed Interest [Line Items]
Principal, gross	$ 1,367,998,000
Allowance for Loan Loss	$ 9,422,000			$ 3,745,000
Percentage of Total Allowance	99.88%			7.96%
Bank Loans
Receivables with Imputed Interest [Line Items]
Principal, gross			$ 134,500,000	$ 134,890,000
Allowance for Loan Loss				$ 1,282,000
Percentage of Total Allowance				2.72%
Loans acquired with deteriorated credit quality			41,700,000
Middle Market Loans
Receivables with Imputed Interest [Line Items]
Principal, gross	$ 51,850,000			$ 380,687,000
Allowance for Loan Loss				$ 3,939,000
Percentage of Total Allowance				8.37%
Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Principal, gross	3,292,000			$ 1,746,000
Allowance for Loan Loss	$ 11,000			$ 11,000
Percentage of Total Allowance	0.12%			0.02%
Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Principal, gross				$ 1,702,046,000
Allowance for Loan Loss				1,300,000
Commercial Real Estate Lending | B notes
Receivables with Imputed Interest [Line Items]
Principal, gross				15,934,000
Commercial Real Estate Lending | Mezzanine loans
Receivables with Imputed Interest [Line Items]
Principal, gross				45,368,000
Commercial Real Estate Lending | CRE whole loans
Receivables with Imputed Interest [Line Items]
Principal, gross			$ 271,800,000	$ 1,640,744,000
Variable Interest Entity, Not Primary Beneficiary | RREF CDO 2006-1 Senior Notes
Receivables with Imputed Interest [Line Items]
Value of Collateral	$ 0
Debt instrument, par value	$ 28,800,000	$ 28,800,000

XML

LOANS (Narrative) (Details)			3 Months Ended	12 Months Ended
		Aug. 04, 2016 USD ($)	Sep. 30, 2016 USD ($) Loan state	Dec. 31, 2015 USD ($)	Jan. 01, 2016 USD ($)	Aug. 04, 2015 USD ($) Loan
Receivables with Imputed Interest [Line Items]
Number of states in which entity operates | state			41
Principal paydown receivable	[1]		$ 44,600,000	$ 17,941,000
Loans held for sale, net	[1]		197,615,000	95,946,000
Allowance for loan loss			9,433,000	47,071,000
Loans held for sale			197,615,000	95,946,000
Collectively evaluated for impairment			1,374,000	5,515,000
Principal, gross			1,423,140,000	2,219,369,000
Middle Market Loans
Receivables with Imputed Interest [Line Items]
Number of loans | Loan						1
Loans held for sale, net			58,700,000	375,500,000
Allowance for loan loss				3,939,000
Loans held for sale			7,182,000			$ 257,300,000
Principal, gross			51,850,000	380,687,000
Bank Loans
Receivables with Imputed Interest [Line Items]
Loans held for sale, net			0	134,700,000
Allowance for loan loss				1,282,000
Loans held for sale				1,475,000
Principal, gross				134,890,000	$ 134,500,000
Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Allowance for loan loss			11,000	11,000
Principal, gross			3,292,000	1,746,000
CRE whole loans
Receivables with Imputed Interest [Line Items]
Allowance for loan loss			9,422,000	$ 3,745,000
Principal, gross			$ 1,367,998,000
Middle Market Loans | Minimum
Receivables with Imputed Interest [Line Items]
Basis spread on variable rate			6.75%	6.25%
Middle Market Loans | Maximum
Receivables with Imputed Interest [Line Items]
Basis spread on variable rate			9.00%	12.00%
Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Allowance for loan loss				$ 1,300,000
Principal, gross				1,702,046,000
Loans held for investment, amortized cost			$ 1,361,183,000	1,692,107,000
Commercial Real Estate Lending | CRE whole loans
Receivables with Imputed Interest [Line Items]
Principal, gross				1,640,744,000	$ 271,800,000
Loans held for investment, amortized cost			$ 1,361,183,000	$ 1,630,801,000
Bank Loans | Minimum
Receivables with Imputed Interest [Line Items]
Basis spread on variable rate				1.25%
Bank Loans | Maximum
Receivables with Imputed Interest [Line Items]
Variable rate basis			three month LIBOR	three month LIBOR
Basis spread on variable rate				8.00%
TEXAS | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			30.40%	26.80%
CALIFORNIA | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			24.30%	28.70%
CALIFORNIA | Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			16.50%
GEORGIA | Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			7.20%	7.40%
GEORGIA | Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			39.50%	44.90%
UTAH | Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			14.90%	11.20%
VIRGINIA | Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			5.90%	9.10%
COLORADO | Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)				4.10%
FLORIDA | Residential Mortgage Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			5.40%	4.40%
Industry Grouping of Automobile | Bank Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)				13.50%
Industry Grouping of Diversified/conglomerate Service | Middle Market Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)				12.80%
Industry Grouping of Diversified/conglomerate Service | Bank Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)				13.00%
Industry Grouping of Retail Stores | Bank Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)				9.60%
Industry Grouping of Beverage, Food and Tobacco | Middle Market Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			17.80%
Industry Grouping of Healthcare, Education and Childcare | Middle Market Loans
Receivables with Imputed Interest [Line Items]
Concentration of loan portfolio risk (in hundredths)			16.80%	12.40%
Agency-Conforming
Receivables with Imputed Interest [Line Items]
Loans held for sale			$ 138,200,000	$ 29,200,000
Jumbo Mortgage Loans
Receivables with Imputed Interest [Line Items]
Loans held for sale			52,200,000	$ 65,300,000
Loan One
Receivables with Imputed Interest [Line Items]
Loans held for investment, amortized cost			27,500,000
Loan Two
Receivables with Imputed Interest [Line Items]
Loans held for investment, amortized cost			$ 2,000,000
Commercial Real Estate Lending
Receivables with Imputed Interest [Line Items]
Number of loans | Loan			7
Number of loans, appraisals | Loan			6
Northport TRS, LLC
Receivables with Imputed Interest [Line Items]
Divestiture of Interest in Subsidiaries and Affiliates, Consideration Received		$ 247,000,000
Noncash divestiture, amount of consideration received		122,000,000
Noncash divestiture, amount of consideration received, debt payment		22,000,000
Proceeds from divestiture of interest in subsidiaries and affiliates		$ 104,200,000
Northport TRS, LLC | Middle Market Loans
Receivables with Imputed Interest [Line Items]
Number of loans		1
Loans held for sale		$ 257,300,000

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

INVESTMENTS IN UNCONSOLIDATED ENTITIES - Schedule of Unconsolidated Entities (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015	Sep. 30, 2016		Sep. 30, 2015	Dec. 31, 2015		Dec. 15, 2015	Jun. 24, 2015	Apr. 30, 2015	Sep. 30, 2014	Nov. 16, 2011
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Investments in Unconsolidated Entities	$ 88,149	[1]		$ 88,149	[1]		$ 50,030	[1]	$ 1,300		$ 750
Equity in Earnings of Unconsolidated Subsidiaries	$ 396		$ (276)	$ 4,022		$ (103)
RRE VIP Borrower, LLC
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Ownership %	0.00%			0.00%
Investments in Unconsolidated Entities	$ 0			$ 0			0
Equity in Earnings of Unconsolidated Subsidiaries	$ 0		0	$ 35		46
Investment in LCC Preferred Stock
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Ownership %	29.00%			29.00%
Investments in Unconsolidated Entities	$ 44,777			$ 44,777			42,017						$ 36,300
Equity in Earnings of Unconsolidated Subsidiaries	$ 415		961	$ 2,759		1,362
Investment in CVC Global Credit Opportunities Fund
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Ownership %	0.00%			0.00%
Investments in Unconsolidated Entities	$ 0			$ 0			0
Equity in Earnings of Unconsolidated Subsidiaries	$ 0		(628)	$ 0		293
Pearlmark Mezzanine Realty Partners IV, L.P.
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Ownership %	47.70%			47.70%
Investments in Unconsolidated Entities	$ 16,751			$ 16,751			6,465
Equity in Earnings of Unconsolidated Subsidiaries	$ 132		0	$ 552		0
Other commitment										$ 50,000
RCM Global, LLC
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Ownership %	28.60%			28.60%
Investments in Unconsolidated Entities	$ 306			$ 306			0
Equity in Earnings of Unconsolidated Subsidiaries	$ (560)		0	$ (160)		0
Pelium
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Ownership %	80.20%			80.20%								80.40%
Investments in Unconsolidated Entities	$ 24,767			$ 24,767			0
Equity in Earnings of Unconsolidated Subsidiaries	1,045		0	2,765		0
Investment in School Lane House
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Investments in Unconsolidated Entities	0			0			0
Equity in Earnings of Unconsolidated Subsidiaries	0		1	(1)		1
Investments in Unconsolidated Entities
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Investments in Unconsolidated Entities	86,601			86,601			48,482
Equity in Earnings of Unconsolidated Subsidiaries	$ 1,032		334	$ 5,950		1,702
Investment in RCT I and II
Equity Method Investment, Financial Statement, Reported Amounts [Abstract]
Ownership %	3.00%			3.00%
Investments in Unconsolidated Entities	$ 1,548			$ 1,548			$ 1,548
Equity in Earnings of Unconsolidated Subsidiaries	$ (636)		$ (610)	$ (1,928)		$ (1,805)

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

FINANCING RECEIVABLES (Allowance for Loan Losses and Recorded Investments in Loans) (Details) - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015	Jan. 01, 2016
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for losses at beginning of period		$ 47,536	$ 4,613
Provision (recovery) for loan and lease losses		19,819	49,889
Loans charged-off	$ (9,600)	(15,761)	(7,027)
Recoveries			61
Deconsolidation of VIEs		(41,696)
Allowance for losses at end of period	9,898	9,898	47,536
Allowance for losses, ending balance:
Individually evaluated for impairment	8,524	8,524	42,021
Collectively evaluated for impairment	1,374	1,374	5,515
Loans acquired with deteriorated credit quality	9,433	9,433	47,071
Loans, ending balance:
Individually evaluated for impairment	90,708	90,708	172,647
Individually evaluated for impairment	1,326,342	1,326,342	2,036,571
Loans acquired with deteriorated credit quality	1,413,707	1,413,707	2,172,298
Commercial Real Estate Loans
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for losses at beginning of period		41,839	4,043
Provision (recovery) for loan and lease losses		7,997	37,735
Loans charged-off		0	0
Recoveries			61
Deconsolidation of VIEs		(40,414)
Allowance for losses at end of period	9,422	9,422	41,839
Allowance for losses, ending balance:
Individually evaluated for impairment	8,059	8,059	40,274
Collectively evaluated for impairment	1,363	1,363	1,565
Loans acquired with deteriorated credit quality				$ 142
Loans, ending balance:
Individually evaluated for impairment	38,133	38,133	169,707
Individually evaluated for impairment	1,323,050	1,323,050	1,522,400
Loans acquired with deteriorated credit quality	1,361,183	1,361,183	1,692,107
Bank Loans
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for losses at beginning of period		1,282	570
Provision (recovery) for loan and lease losses		(358)	2,887
Loans charged-off		358	(2,175)
Recoveries			0
Deconsolidation of VIEs		(1,282)
Allowance for losses at end of period	0	0	1,282
Allowance for losses, ending balance:
Individually evaluated for impairment	0	0	1,282
Collectively evaluated for impairment	0	0	0
Loans, ending balance:
Individually evaluated for impairment	0	0	1,544
Individually evaluated for impairment	0	0	132,973
Loans acquired with deteriorated credit quality			135,992
Middle Market Loans
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for losses at beginning of period		3,939	0
Provision (recovery) for loan and lease losses		12,180	8,901
Loans charged-off		(16,119)	(4,962)
Recoveries			0
Deconsolidation of VIEs		0
Allowance for losses at end of period	0	0	3,939
Allowance for losses, ending balance:
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	0	0	3,939
Loans, ending balance:
Individually evaluated for impairment	51,539	51,539	0
Individually evaluated for impairment	0	0	379,452
Loans acquired with deteriorated credit quality	58,721	58,721	379,452
Residential Mortgage Loans
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for losses at beginning of period		11	0
Provision (recovery) for loan and lease losses		0	(99)
Loans charged-off		0	110
Recoveries			0
Deconsolidation of VIEs		0
Allowance for losses at end of period	11	11	11
Allowance for losses, ending balance:
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	11	11	11
Loans, ending balance:
Individually evaluated for impairment	0	0	0
Individually evaluated for impairment	3,292	3,292	1,746
Direct Financing Leases
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for losses at beginning of period		465	0
Provision (recovery) for loan and lease losses		0	465
Loans charged-off		0	0
Recoveries			0
Deconsolidation of VIEs		0
Allowance for losses at end of period	465	465	465
Allowance for losses, ending balance:
Individually evaluated for impairment	465	465	465
Collectively evaluated for impairment	0	0	0
Loans, ending balance:
Individually evaluated for impairment	1,036	1,036	1,396
Individually evaluated for impairment	0	0	0
Receivables Acquired with Deteriorated Credit Quality
Allowance for losses, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Loans, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Receivables Acquired with Deteriorated Credit Quality | Commercial Real Estate Loans
Allowance for losses, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Loans, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Receivables Acquired with Deteriorated Credit Quality | Bank Loans
Allowance for losses, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Loans, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Receivables Acquired with Deteriorated Credit Quality | Middle Market Loans
Allowance for losses, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Loans, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Receivables Acquired with Deteriorated Credit Quality | Residential Mortgage Loans
Allowance for losses, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Loans, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Receivables Acquired with Deteriorated Credit Quality | Direct Financing Leases
Allowance for losses, ending balance:
Loans acquired with deteriorated credit quality	0	0	0
Loans, ending balance:
Loans acquired with deteriorated credit quality	$ 0	$ 0	$ 0

XML

FINANCING RECEIVABLES (Credit Risk Profiles of Bank Loans, Middle Market Loans and Commercial Real Estate Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Financing Receivables [Line Items]
Loans and receivables	$ 1,413,707	$ 2,172,298
Loans held for sale	197,615	95,946
Middle Market Loans
Schedule Of Financing Receivables [Line Items]
Loans and receivables	58,721	379,452
Loans held for sale	4,600
Middle Market Loans | Rating 1
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	44,252
Middle Market Loans | Rating 2
Schedule Of Financing Receivables [Line Items]
Loans and receivables	40,048	305,578
Middle Market Loans | Rating 3
Schedule Of Financing Receivables [Line Items]
Loans and receivables	11,491	29,622
Middle Market Loans | Rating 4
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	0
Middle Market Loans | Rating 5
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	0
Middle Market Loans | Held for Sale
Schedule Of Financing Receivables [Line Items]
Loans held for sale	7,182	0
Bank Loans
Schedule Of Financing Receivables [Line Items]
Loans and receivables		135,992
Bank Loans | Rating 1
Schedule Of Financing Receivables [Line Items]
Loans and receivables		113,897
Bank Loans | Rating 2
Schedule Of Financing Receivables [Line Items]
Loans and receivables		17,578
Bank Loans | Rating 3
Schedule Of Financing Receivables [Line Items]
Loans and receivables		1,498
Bank Loans | Rating 4
Schedule Of Financing Receivables [Line Items]
Loans and receivables		0
Bank Loans | Rating 5
Schedule Of Financing Receivables [Line Items]
Loans and receivables		1,544
Bank Loans | Held for Sale
Schedule Of Financing Receivables [Line Items]
Loans held for sale		1,475
CRE whole loans
Schedule Of Financing Receivables [Line Items]
Loans and receivables	1,361,183	1,630,801
CRE whole loans | Rating 1
Schedule Of Financing Receivables [Line Items]
Loans and receivables	1,232,641	1,596,099
CRE whole loans | Rating 2
Schedule Of Financing Receivables [Line Items]
Loans and receivables	99,083	32,500
CRE whole loans | Rating 3
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	0
CRE whole loans | Rating 4
Schedule Of Financing Receivables [Line Items]
Loans and receivables	29,459	2,202
CRE whole loans | Held for Sale
Schedule Of Financing Receivables [Line Items]
Loans held for sale	0	0
B notes
Schedule Of Financing Receivables [Line Items]
Loans and receivables		15,934
B notes | Rating 1
Schedule Of Financing Receivables [Line Items]
Loans and receivables		15,934
B notes | Rating 2
Schedule Of Financing Receivables [Line Items]
Loans and receivables		0
B notes | Rating 3
Schedule Of Financing Receivables [Line Items]
Loans and receivables		0
B notes | Rating 4
Schedule Of Financing Receivables [Line Items]
Loans and receivables		0
B notes | Held for Sale
Schedule Of Financing Receivables [Line Items]
Loans held for sale		0
Mezzanine loans
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	45,372
Mezzanine loans | Rating 1
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	7,300
Mezzanine loans | Rating 2
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	0
Mezzanine loans | Rating 3
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	0
Mezzanine loans | Rating 4
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	38,072
Mezzanine loans | Held for Sale
Schedule Of Financing Receivables [Line Items]
Loans held for sale	0	0
Commercial Real Estate Loans
Schedule Of Financing Receivables [Line Items]
Loans and receivables	1,361,183	1,692,107
Commercial Real Estate Loans | Rating 1
Schedule Of Financing Receivables [Line Items]
Loans and receivables	1,232,641	1,619,333
Commercial Real Estate Loans | Rating 2
Schedule Of Financing Receivables [Line Items]
Loans and receivables	99,083	32,500
Commercial Real Estate Loans | Rating 3
Schedule Of Financing Receivables [Line Items]
Loans and receivables	0	0
Commercial Real Estate Loans | Rating 4
Schedule Of Financing Receivables [Line Items]
Loans and receivables	29,459	40,274
Commercial Real Estate Loans | Held for Sale
Schedule Of Financing Receivables [Line Items]
Loans held for sale	$ 0	$ 0

XML

FINANCING RECEIVABLES (Loans Receivable - Related Party) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 4,759	$ 39,990
Current	1,609,907	2,263,699
Total Loans Receivable	1,614,666	2,303,689
Total Loans Greater Than 90 days and accruing	0	0
CRE whole loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Current	1,361,183	1,630,801
Total Loans Receivable	1,361,183	1,630,801
Total Loans Greater Than 90 days and accruing	0	0
B notes
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		0
Current		15,934
Total Loans Receivable		15,934
Total Loans Greater Than 90 days and accruing		0
Mezzanine loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	38,072
Current	0	7,300
Total Loans Receivable	0	45,372
Total Loans Greater Than 90 days and accruing	0	0
Bank Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,544
Current		132,973
Total Loans Receivable		134,517
Total Loans Greater Than 90 days and accruing		0
Middle Market Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,625	0
Current	54,096	379,452
Total Loans Receivable	58,721	379,452
Total Loans Greater Than 90 days and accruing	0	0
Direct Financing Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5	226
Current	1,031	1,170
Total Loans Receivable	1,036	1,396
Total Loans Greater Than 90 days and accruing	0	0
Residential Mortgage Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	129	148
Current	193,597	96,069
Total Loans Receivable	193,726	96,217
Total Loans Greater Than 90 days and accruing	0	0
30-59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5	1,583
30-59 Days | CRE whole loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
30-59 Days | B notes
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		0
30-59 Days | Mezzanine loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
30-59 Days | Bank Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,544
30-59 Days | Middle Market Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
30-59 Days | Direct Financing Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5	12
30-59 Days | Residential Mortgage Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	27
60-89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,625	38,327
60-89 Days | CRE whole loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
60-89 Days | B notes
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		0
60-89 Days | Mezzanine loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	38,072
60-89 Days | Bank Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		0
60-89 Days | Middle Market Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,625	0
60-89 Days | Direct Financing Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	214
60-89 Days | Residential Mortgage Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	41
Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	129	80
Greater than 90 Days | CRE whole loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Greater than 90 Days | B notes
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		0
Greater than 90 Days | Mezzanine loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Greater than 90 Days | Bank Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		0
Greater than 90 Days | Middle Market Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Greater than 90 Days | Direct Financing Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Greater than 90 Days | Residential Mortgage Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 129	$ 80

XML

FINANCING RECEIVABLES (Impaired Loans) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Jan. 01, 2016
Financing Receivable, Impaired [Line Items]
Recorded Balance	$ 38,133	$ 171,251
Unpaid Principal Balance	38,133	171,258
Specific Allowance	(8,059)	(41,556)
Average Investment in Impaired Loans	38,133	170,409
Interest Income Recognized	499	1,123
CRE whole loans
Financing Receivable, Impaired [Line Items]
Loans without a specific valuation allowance, Recorded balance	8,674	129,433
Loans with a specific valuation allowance, Recorded balance	29,459	2,202
Recorded Balance	38,133	131,635
Loans without a specific valuation allowance, Unpaid Principal Balance	8,674	129,433
Loans with a specific valuation allowance, Unpaid Principal Balance	29,459	2,202
Unpaid Principal Balance	38,133	131,635
Specific Allowance	(8,059)	(2,202)
Loans without a specific valuation allowance, Average Investment in Impaired Loans	8,674	128,591
Loans with specific valuation allowance, Average Investment in Impaired Loans	29,459	2,202
Average Investment in Impaired Loans	38,133	130,793
Loans with a specific valuation allowance, Interest Income Recognized	65	63
Interest Income Recognized	499	4,002
Loans without a specific valuation allowance, Interest Income Recognized	434	3,939
B notes
Financing Receivable, Impaired [Line Items]
Loans without a specific valuation allowance, Recorded balance		0
Loans with a specific valuation allowance, Recorded balance		0
Recorded Balance		0
Loans without a specific valuation allowance, Unpaid Principal Balance		0
Loans with a specific valuation allowance, Unpaid Principal Balance		0
Unpaid Principal Balance		0
Specific Allowance		0
Loans without a specific valuation allowance, Average Investment in Impaired Loans		0
Loans with specific valuation allowance, Average Investment in Impaired Loans		0
Average Investment in Impaired Loans		0
Loans with a specific valuation allowance, Interest Income Recognized		0
Interest Income Recognized		0
Loans without a specific valuation allowance, Interest Income Recognized		0
Mezzanine loans
Financing Receivable, Impaired [Line Items]
Loans without a specific valuation allowance, Recorded balance	0	0
Loans with a specific valuation allowance, Recorded balance	0	38,072
Recorded Balance	0	38,072
Loans without a specific valuation allowance, Unpaid Principal Balance	0	0
Loans with a specific valuation allowance, Unpaid Principal Balance	0	38,072
Unpaid Principal Balance	0	38,072
Specific Allowance	0	(38,072)
Loans without a specific valuation allowance, Average Investment in Impaired Loans	0	0
Loans with specific valuation allowance, Average Investment in Impaired Loans	0	38,072
Average Investment in Impaired Loans	0	38,072
Loans with a specific valuation allowance, Interest Income Recognized	0	(2,879)
Interest Income Recognized	0	(2,879)
Loans without a specific valuation allowance, Interest Income Recognized	0	0
Bank Loans
Financing Receivable, Impaired [Line Items]
Loans without a specific valuation allowance, Recorded balance		0
Loans with a specific valuation allowance, Recorded balance	0	1,544
Recorded Balance		1,544
Loans without a specific valuation allowance, Unpaid Principal Balance		0
Loans with a specific valuation allowance, Unpaid Principal Balance	0	1,551
Unpaid Principal Balance		1,551
Specific Allowance	0	(1,282)
Loans without a specific valuation allowance, Average Investment in Impaired Loans		0
Loans with specific valuation allowance, Average Investment in Impaired Loans	0	1,544
Average Investment in Impaired Loans		1,544
Loans with a specific valuation allowance, Interest Income Recognized	0	0
Interest Income Recognized		0
Loans without a specific valuation allowance, Interest Income Recognized		0
Middle Market Loans
Financing Receivable, Impaired [Line Items]
Loans without a specific valuation allowance, Recorded balance	0	0
Loans with a specific valuation allowance, Recorded balance	0	0
Recorded Balance	0	0
Loans without a specific valuation allowance, Unpaid Principal Balance	0	0
Loans with a specific valuation allowance, Unpaid Principal Balance	0	0
Unpaid Principal Balance	0	0
Specific Allowance	0	0
Loans without a specific valuation allowance, Average Investment in Impaired Loans	0	0
Loans with specific valuation allowance, Average Investment in Impaired Loans	0	0
Average Investment in Impaired Loans	0	0
Loans with a specific valuation allowance, Interest Income Recognized	0	0
Interest Income Recognized	0	0
Loans without a specific valuation allowance, Interest Income Recognized	0	0
Residential Mortgage Loans
Financing Receivable, Impaired [Line Items]
Loans without a specific valuation allowance, Recorded balance	0	0
Loans with a specific valuation allowance, Recorded balance	0	0
Recorded Balance	0	0
Loans without a specific valuation allowance, Unpaid Principal Balance	0	0
Loans with a specific valuation allowance, Unpaid Principal Balance	0	0
Unpaid Principal Balance	0	0
Specific Allowance	0	0
Loans without a specific valuation allowance, Average Investment in Impaired Loans	0	0
Loans with specific valuation allowance, Average Investment in Impaired Loans	0	0
Average Investment in Impaired Loans	0	0
Loans with a specific valuation allowance, Interest Income Recognized	0	0
Interest Income Recognized	0	0
Loans without a specific valuation allowance, Interest Income Recognized	$ 0	$ 0
Total Deconsolidated VIEs
Financing Receivable, Impaired [Line Items]
Recorded Balance			$ 91,300

XML

FINANCING RECEIVABLES (Loan Portfolio Troubled-debt Restructurings) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2015 USD ($) Loan
Troubled debt restructuring [Abstract]
Number of Loans | Loan	3	4
Pre-Modification Outstanding Recorded Balance	$ 29,459	$ 138,031
Post-Modification Outstanding Recorded Balance	$ 21,400	$ 99,959
CRE whole loans
Troubled debt restructuring [Abstract]
Number of Loans | Loan	3	3
Pre-Modification Outstanding Recorded Balance	$ 29,459	$ 99,959
Post-Modification Outstanding Recorded Balance	$ 21,400	$ 99,959
B notes
Troubled debt restructuring [Abstract]
Number of Loans | Loan		0
Pre-Modification Outstanding Recorded Balance		$ 0
Post-Modification Outstanding Recorded Balance		$ 0
Mezzanine loans
Troubled debt restructuring [Abstract]
Number of Loans | Loan	0	1
Pre-Modification Outstanding Recorded Balance	$ 0	$ 38,072
Post-Modification Outstanding Recorded Balance	$ 0	$ 0
Bank Loans
Troubled debt restructuring [Abstract]
Number of Loans | Loan		0
Pre-Modification Outstanding Recorded Balance		$ 0
Post-Modification Outstanding Recorded Balance		$ 0
Middle Market Loans
Troubled debt restructuring [Abstract]
Number of Loans | Loan	0	0
Pre-Modification Outstanding Recorded Balance	$ 0	$ 0
Post-Modification Outstanding Recorded Balance	$ 0	$ 0
Residential Mortgage Loans
Troubled debt restructuring [Abstract]
Number of Loans | Loan	0	0
Pre-Modification Outstanding Recorded Balance	$ 0	$ 0
Post-Modification Outstanding Recorded Balance	$ 0	$ 0

XML

FINANCING RECEIVABLES Narrative (Details)				3 Months Ended	9 Months Ended	12 Months Ended
		Sep. 30, 2016 USD ($) Loan	Dec. 31, 2015 USD ($) Loan	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2016 USD ($) Loan	Dec. 31, 2015 USD ($) Loan	Apr. 25, 2016 USD ($)	Jan. 01, 2016 Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale		$ 197,615,000	$ 95,946,000	$ 197,615,000	$ 197,615,000	$ 95,946,000
Loans in default | Loan		1	1
Number of defaulted loans | Loan		1	1	1	1	1
Loans charged-off		$ 9,600,000			$ 15,761,000	$ 7,027,000
Loans acquired with deteriorated credit quality		1,413,707,000	$ 2,172,298,000	$ 1,413,707,000	1,413,707,000	2,172,298,000
Individually evaluated for impairment		$ 8,524,000	42,021,000	$ 8,524,000	$ 8,524,000	42,021,000
Number of loans, trigger items | Loan		6		6	6
Number of loans, trigger items, other | Loan		2		2	2
Provision (recovery) for loan and lease losses					$ 19,819,000	49,889,000
Direct financing leases, net of allowances	[1]	$ 571,000	931,000	$ 571,000	571,000	931,000
Commercial Real Estate Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans charged-off					0	0
Loans acquired with deteriorated credit quality		1,361,183,000	1,692,107,000	1,361,183,000	1,361,183,000	1,692,107,000
Individually evaluated for impairment		8,059,000	40,274,000	8,059,000	8,059,000	40,274,000
Provision (recovery) for loan and lease losses					7,997,000	37,735,000
Bank Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans charged-off					(358,000)	2,175,000
Loans acquired with deteriorated credit quality			135,992,000			135,992,000
Individually evaluated for impairment		0	1,282,000	0	0	1,282,000
Provision (recovery) for loan and lease losses					(358,000)	2,887,000
Loans held for investment, amortized cost			135,992,000			135,992,000
Direct Financing Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans charged-off					0	0
Individually evaluated for impairment		465,000	465,000	465,000	465,000	465,000
Provision (recovery) for loan and lease losses					0	465,000
Residential Mortgage Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale		190,433,000	94,471,000	190,433,000	190,433,000	94,471,000
Loans charged-off					0	(110,000)
Individually evaluated for impairment		0	0	0	0	0
Provision (recovery) for loan and lease losses					0	(99,000)
CRE whole loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality		1,361,183,000	$ 1,630,801,000	1,361,183,000	1,361,183,000	$ 1,630,801,000
Number of impaired loans | Loan			1			1
Individually evaluated for impairment			$ 2,200,000			$ 2,200,000
Middle Market Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale		4,600,000		4,600,000	4,600,000
Loans charged-off					16,119,000	4,962,000
Loans acquired with deteriorated credit quality		$ 58,721,000	379,452,000	$ 58,721,000	$ 58,721,000	379,452,000
Number of impaired loans | Loan		1		1	1
Individually evaluated for impairment		$ 0	0	$ 0	$ 0	0
Provision (recovery) for loan and lease losses					12,180,000	8,901,000
Loans held for investment, amortized cost		58,721,000	375,513,000	58,721,000	58,721,000	375,513,000
Rating 1 | Commercial Real Estate Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality		1,232,641,000	$ 1,619,333,000	1,232,641,000	1,232,641,000	$ 1,619,333,000
Number of impaired loans | Loan			4			4
Rating 1 | Bank Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality			$ 113,897,000			$ 113,897,000
Rating 1 | CRE whole loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality		1,232,641,000	1,596,099,000	1,232,641,000	1,232,641,000	1,596,099,000
Rating 1 | Middle Market Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality		0	44,252,000	0	0	44,252,000
Rating 4 | Commercial Real Estate Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality		$ 29,459,000	40,274,000	$ 29,459,000	$ 29,459,000	40,274,000
Number of impaired loans | Loan		3		3	3
Rating 4 | Bank Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality			0			0
Rating 4 | CRE whole loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality		$ 29,459,000	2,202,000	$ 29,459,000	$ 29,459,000	2,202,000
Rating 4 | Middle Market Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality		0	0	0	0	0
Nonperforming Financing Receivable | Bank Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired with deteriorated credit quality			1,500,000			1,500,000
Variable Interest Entity, Not Primary Beneficiary | RREF CDO 2006-1 Senior Notes
Accounts, Notes, Loans and Financing Receivable [Line Items]
Debt instrument, par value		28,800,000		28,800,000	28,800,000		$ 28,800,000
Value of Collateral		$ 0		$ 0	$ 0
Total Deconsolidated VIEs
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of impaired loans | Loan								4
Commercial Real Estate Lending
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of impaired loans | Loan		2		2	2
Number of loans, appraisals | Loan		6		6	6
Loan One
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable, allowance for credit losses				$ (6,100,000)	$ 6,100,000
Loans held for investment, amortized cost		$ 27,500,000		27,500,000	27,500,000
Loan Two
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable, allowance for credit losses				(2,000,000)	2,000,000
Loans held for investment, amortized cost		2,000,000		2,000,000	2,000,000
Commercial Real Estate Lending
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, amortized cost		1,361,183,000	1,692,107,000	1,361,183,000	1,361,183,000	1,692,107,000
Whole Loans, Floating Rate, Modification | Commercial Real Estate Lending
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, amortized cost		$ 2,000,000	$ 32,500,000	$ 2,000,000	$ 2,000,000	$ 32,500,000

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Jan. 05, 2016	Dec. 15, 2015	Jul. 30, 2015	Apr. 30, 2015	Feb. 26, 2014	Sep. 30, 2016	[1]	Dec. 31, 2015	[1]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Investments in unconsolidated entities			$ 1,300		$ 750		$ 88,149		$ 50,030
Life Care Funding, LLC
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ownership percentage in VIE			70.90%		60.70%	50.20%
Acquisition of membership interests	$ 500	$ 750		$ 375	$ 375
Recognized identifiable assets acquired, goodwill, and liabilities assumed						$ 4,100

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

INTANGIBLE ASSETS (Intangible Assets) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)		Sep. 30, 2016 USD ($)
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period			$ 26,228
Additions			13,815
Sales			0
Amortization	$ (4,886)		(4,886)
Balance, beginning of end	35,157		35,157
Temporary impairment adjustment			(5,600)
Other than temporary impairment adjustment			(3,671)
Balance, end of period	25,886	[1]	25,886	[1]
Management Contracts
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period			5,316
Additions			0
Sales			0
Amortization	(1,133)		(1,133)
Balance, beginning of end	4,183		4,183
Temporary impairment adjustment			0
Other than temporary impairment adjustment			(3,671)
Balance, end of period	512		512
Mortgage Servicing Rights
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period			20,822
Additions			13,815
Sales			0
Amortization	(3,753)		(3,753)
Balance, beginning of end	30,884		30,884
Temporary impairment adjustment	800		(5,600)
Other than temporary impairment adjustment			0
Balance, end of period	25,284		25,284
Wholesale or Correspondent Relationships [Member] | Wholesale/Correspondent Relationships
Finite-lived Intangible Assets [Roll Forward]
Balance, beginning of period			90
Additions			0
Sales			0
Amortization	0		0
Balance, beginning of end	90		90
Temporary impairment adjustment			0
Other than temporary impairment adjustment			0
Balance, end of period	$ 90		$ 90

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

INTANGIBLE ASSETS (Mortgage Servicing Rights) (Details) - Mortgage Servicing Rights - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Principal Amount Outstanding of Loans Held-in-portfolio [Roll Forward]
Balance, beginning of period	$ 1,998,273	$ 894,767
Additions	1,288,392	1,236,145
Payoffs, sales and curtailments	(294,899)	(132,639)
Balance, end of period	$ 2,991,766	$ 1,998,273

XML

INTANGIBLE ASSETS (Servicing Activities) (Details) - Other Income - Mortgage Servicing Rights - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Servicing fees from capitalized portfolio	$ 1,794	$ 1,071	$ 4,786	$ 2,533
Late fees	58	37	157	78
Other ancillary servicing revenue	$ 12	$ 2	$ 24	$ 9

XML

INTANGIBLE ASSETS (Narrative) (Details)			1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($) Contracts	Dec. 31, 2015 USD ($)	Oct. 31, 2016 Contracts	Sep. 30, 2016 USD ($) Contracts	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Contracts	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Finite-Lived Intangible Assets [Line Items]
Fee income				$ 2,023,000	$ 781,000	$ 1,425,000	$ 4,767,000
Amortization of MSRs				$ 331,000	518,000	$ 1,100,000	1,500,000
Number of contracts tested for impairment | Contracts	2			2		2
Impairment of Intangible Assets, Finite-lived						$ 3,671,000
Expected amortization, 2016, remainder of fiscal year	$ 299,000			$ 299,000		299,000
Expected amortization, 2017	213,000			213,000		213,000
Expected amortization, 2018	0			0		0
Expected amortization, 2019	0			0		0
Expected amortization, 2020	0			0		$ 0
Acquired finite-lived intangible assets, weighted average useful life						8 months 12 days		5 years 9 months 18 days
Temporary impairment adjustment						$ (5,600,000)
Mortgage Servicing Rights
Finite-Lived Intangible Assets [Line Items]
Amortization of MSRs				1,500,000	1,300,000	3,800,000	3,100,000
Impairment of Intangible Assets, Finite-lived						0
Expected amortization, 2016, remainder of fiscal year	1,600,000			1,600,000		1,600,000
Expected amortization, 2017	5,500,000			5,500,000		5,500,000
Expected amortization, 2018	4,400,000			4,400,000		4,400,000
Expected amortization, 2019	3,500,000			3,500,000		3,500,000
Expected amortization, 2020	2,900,000			2,900,000		2,900,000
Principal amount outstanding	$ 2,991,766,000	$ 1,998,273,000		2,991,766,000		2,991,766,000		$ 1,998,273,000	$ 894,767,000
Acquired finite-lived intangible assets, weighted average useful life	5 years 1 month 6 days	6 years 8 months 12 days
Temporary impairment adjustment				800,000		(5,600,000)
Finite-lived intangible assets, fair value	$ 25,300,000	$ 21,300,000		25,300,000		25,300,000		$ 21,300,000
Management Contracts
Finite-Lived Intangible Assets [Line Items]
Fee income				$ 553,000	$ 791,000	$ 1,500,000	$ 2,700,000
Subsequent Event
Finite-Lived Intangible Assets [Line Items]
Number of CLOs liquidated | Contracts			1

XML

BORROWINGS (Schedule of Debt) (Details) - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Principal Outstanding		$ 1,420,083	$ 1,921,081
Unamortized Issuance Costs and Discounts		18,241	25,793
Outstanding Borrowings		$ 1,401,842	$ 1,895,288
Weighted Average Borrowing Rate		3.48%	2.89%
Weighted Average Remaining Maturity		7 years 6 months	10 years 7 months 6 days
Value of Collateral		$ 1,783,164	$ 2,546,648
Accrued interest costs	[1]	4,913	5,604
RREF CDO 2006-1 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding			52,772
Unamortized Issuance Costs and Discounts			0
Outstanding Borrowings			$ 52,772
Weighted Average Borrowing Rate			2.60%
Weighted Average Remaining Maturity			30 years 7 months 6 days
Value of Collateral			$ 94,379
RREF CDO 2007-1 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding			91,752
Unamortized Issuance Costs and Discounts			0
Outstanding Borrowings			$ 91,752
Weighted Average Borrowing Rate			1.65%
Weighted Average Remaining Maturity			30 years 9 months 18 days
Value of Collateral			$ 210,904
RCC CRE Notes 2013 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding		16,315	58,465
Unamortized Issuance Costs and Discounts		136	664
Outstanding Borrowings		$ 16,179	$ 57,801
Weighted Average Borrowing Rate		3.96%	3.21%
Weighted Average Remaining Maturity		12 years 2 months 12 days	13 years
Value of Collateral		$ 63,199	$ 104,439
RCC 2014-CRE2 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding		137,936	198,594
Unamortized Issuance Costs and Discounts		2,079	2,991
Outstanding Borrowings		$ 135,857	$ 195,603
Weighted Average Borrowing Rate		1.99%	1.68%
Weighted Average Remaining Maturity		15 years 7 months 6 days	16 years 3 months 18 days
Value of Collateral		$ 255,062	$ 313,663
RCC 2015-CRE3 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding		206,113	282,127
Unamortized Issuance Costs and Discounts		2,630	3,466
Outstanding Borrowings		$ 203,483	$ 278,661
Weighted Average Borrowing Rate		2.61%	2.25%
Weighted Average Remaining Maturity		15 years 6 months	16 years 2 months 18 days
Value of Collateral		$ 260,058	$ 341,099
RCC 2015-CRE4 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding		175,987	223,735
Unamortized Issuance Costs and Discounts		2,534	3,160
Outstanding Borrowings		$ 173,453	$ 220,575
Weighted Average Borrowing Rate		2.33%	2.06%
Weighted Average Remaining Maturity		15 years 10 months 24 days	16 years 7 months 18 days
Value of Collateral		$ 262,579	$ 308,042
Apidos Cinco CDO Senior Notes
Debt Instrument [Line Items]
Principal Outstanding			135,417
Unamortized Issuance Costs and Discounts			0
Outstanding Borrowings			$ 135,417
Weighted Average Borrowing Rate			1.25%
Weighted Average Remaining Maturity			4 years 4 months 24 days
Value of Collateral			$ 154,584
Unsecured Junior Subordinated Debentures
Debt Instrument [Line Items]
Principal Outstanding		51,548	51,548
Unamortized Issuance Costs and Discounts		0	135
Outstanding Borrowings		$ 51,548	$ 51,413
Weighted Average Borrowing Rate		4.64%	4.40%
Weighted Average Remaining Maturity		20 years 1 month 6 days	20 years 9 months 18 days
Value of Collateral		$ 0	$ 0
6.0% Convertible Senior Notes
Debt Instrument [Line Items]
Principal Outstanding		115,000	115,000
Unamortized Issuance Costs and Discounts		3,654	4,917
Outstanding Borrowings		$ 111,346	$ 110,083
Weighted Average Borrowing Rate		6.00%	6.00%
Weighted Average Remaining Maturity		2 years 2 months 12 days	2 years 10 months 24 days
Value of Collateral		$ 0	$ 0
Interest date, stated percentage		6.00%
8.0% Convertible Senior Notes
Debt Instrument [Line Items]
Principal Outstanding		$ 100,000	100,000
Unamortized Issuance Costs and Discounts		3,758	4,599
Outstanding Borrowings		$ 96,242	$ 95,401
Weighted Average Borrowing Rate		8.00%	8.00%
Weighted Average Remaining Maturity		3 years 3 months 18 days	4 years
Value of Collateral		$ 0	$ 0
Interest date, stated percentage		8.00%
CRE - Term Repurchase Facility
Debt Instrument [Line Items]
Principal Outstanding		$ 338,070	225,346
Unamortized Issuance Costs and Discounts		3,101	2,418
Outstanding Borrowings		$ 334,969	$ 222,928
Weighted Average Borrowing Rate		2.86%	2.64%
Weighted Average Remaining Maturity		1 year 10 months 24 days	1 year 7 months 6 days
Value of Collateral		$ 491,760	$ 321,267
Accrued interest costs		410	315
CMBS - Term Repurchase Facilities
Debt Instrument [Line Items]
Principal Outstanding		77,811	25,658
Unamortized Issuance Costs and Discounts		29	2
Outstanding Borrowings		$ 77,782	$ 25,656
Weighted Average Borrowing Rate		2.67%	1.57%
Weighted Average Remaining Maturity		210 days	1 year 1 month 6 days
Value of Collateral		$ 113,531	$ 31,650
Accrued interest costs		136	18
Trust Certificate - Term Repurchase Facility
Debt Instrument [Line Items]
Principal Outstanding		26,661	26,659
Unamortized Issuance Costs and Discounts		320	415
Outstanding Borrowings		$ 26,341	$ 26,244
Weighted Average Borrowing Rate		6.03%	5.85%
Weighted Average Remaining Maturity		2 years 1 month 6 days	2 years 10 months 24 days
Value of Collateral		$ 89,181	$ 89,181
Accrued interest costs		62	61
Residential Investments - Term Repurchase Facility
Debt Instrument [Line Items]
Principal Outstanding			782
Unamortized Issuance Costs and Discounts			0
Outstanding Borrowings			$ 782
Weighted Average Borrowing Rate			2.75%
Weighted Average Remaining Maturity			264 days
Value of Collateral			$ 835
Accrued interest costs		0	30
Residential Mortgage Financing Agreements
Debt Instrument [Line Items]
Principal Outstanding		174,642	85,819
Unamortized Issuance Costs and Discounts		0	0
Outstanding Borrowings		$ 174,642	$ 85,819
Weighted Average Borrowing Rate		3.35%	3.10%
Weighted Average Remaining Maturity		63 days	257 days
Value of Collateral		$ 247,794	$ 120,952
CMBS - Short Term Repurchase Agreements
Debt Instrument [Line Items]
Principal Outstanding			57,407
Unamortized Issuance Costs and Discounts			0
Outstanding Borrowings			$ 57,407
Weighted Average Borrowing Rate			2.06%
Weighted Average Remaining Maturity			18 days
Value of Collateral			$ 79,347
Accrued interest costs		$ 0	40
Senior Secured Revolving Credit Agreement
Debt Instrument [Line Items]
Principal Outstanding			190,000
Unamortized Issuance Costs and Discounts			3,026
Outstanding Borrowings			$ 186,974
Weighted Average Borrowing Rate			3.09%
Weighted Average Remaining Maturity			3 years 2 months 1 day
Value of Collateral			$ 376,306

[1] September 30, 2016 December 31, 2015Liabilities of consolidated VIEs included in the total liabilities above: Borrowings $528,971 $1,032,581 Accrued interest expense500 923 Derivatives, at fair value— 3,346 Accounts payable and other liabilities147 (117) Total liabilities of consolidated VIEs$529,618 $1,036,733

XML

BORROWINGS (Securitization) (Details) $ in Millions	Sep. 30, 2016 USD ($)
RCC CRE Notes 2013 Senior Notes
Debt Instrument [Line Items]
Cumulative amount repaid	$ 244.5
RCC 2014-CRE2 Senior Notes
Debt Instrument [Line Items]
Cumulative amount repaid	97.4
RCC 2015-CRE3
Debt Instrument [Line Items]
Cumulative amount repaid	76.0
RCC 2015-CRE4 Senior Notes
Debt Instrument [Line Items]
Cumulative amount repaid	$ 47.7

XML

BORROWINGS (Repurchase and Mortgage Finance Facilities) (Details) $ in Thousands	Sep. 30, 2016 USD ($) Loan	Dec. 31, 2015 USD ($) Loan
Debt Instrument [Line Items]
Weighted Average Interest Rate	3.48%	2.89%
Principal Outstanding	$ 1,420,083	$ 1,921,081
Unamortized Issuance Costs and Discounts	$ 18,241	$ 25,793
Senior Secured Revolving Credit Agreement
Debt Instrument [Line Items]
Weighted Average Interest Rate		3.09%
Principal Outstanding		$ 190,000
Unamortized Issuance Costs and Discounts		$ 3,026
CMBS - Term Repurchase Facilities
Debt Instrument [Line Items]
Weighted Average Interest Rate	2.67%	1.57%
Principal Outstanding	$ 77,811	$ 25,658
Unamortized Issuance Costs and Discounts	$ 29	$ 2
CRE - Term Repurchase Facility
Debt Instrument [Line Items]
Weighted Average Interest Rate	2.86%	2.64%
Principal Outstanding	$ 338,070	$ 225,346
Unamortized Issuance Costs and Discounts	3,101	2,418
Repurchase Agreements
Debt Instrument [Line Items]
Principal Outstanding	613,734	418,836
CMBS bonds held as collateral, fair value	942,267	643,232
Wells Fargo Bank | CRE - Term Repurchase Facility | RCC Real Estate
Debt Instrument [Line Items]
Unamortized Issuance Costs and Discounts	1,800	675
Wells Fargo Bank | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	136,867	42,030
Value of Collateral	$ 199,436	$ 59,841
Number of Positions as Collateral | Loan	457	166
Weighted Average Interest Rate	3.31%	3.03%
Wells Fargo Securities, LLC | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	$ 0	$ 13,548
Value of Collateral	$ 0	$ 19,829
Number of Positions as Collateral | Loan	0	3
Weighted Average Interest Rate	0.00%	1.93%
Deutsche Bank Securities, LLC | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	$ 0	$ 43,859
Value of Collateral	$ 0	$ 59,518
Number of Positions as Collateral | Loan	0	17
Weighted Average Interest Rate	0.00%	2.10%
New Century Bank | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	$ 37,775	$ 43,789
Value of Collateral	$ 48,359	$ 61,111
Number of Positions as Collateral | Loan	163	199
Weighted Average Interest Rate	3.50%	3.17%
CMBS - Term Repurchase Facilities | Wells Fargo Bank | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	$ 18,608	$ 25,656
Value of Collateral	$ 24,008	$ 31,650
Number of Positions as Collateral | Loan	15	21
Weighted Average Interest Rate	1.82%	1.57%
Unamortized Issuance Costs and Discounts	$ 3	$ 2
CMBS - Term Repurchase Facilities | Deutsche Bank | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	59,174	0
Value of Collateral	$ 89,523	$ 0
Number of Positions as Collateral | Loan	20	0
Weighted Average Interest Rate	2.93%	0.00%
CMBS - Term Repurchase Facilities | Deutsche Bank Securities, LLC | Repurchase Agreements
Debt Instrument [Line Items]
Unamortized Issuance Costs and Discounts	$ 26	$ 0
CRE - Term Repurchase Facility | Wells Fargo Bank | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	194,903	123,937
Value of Collateral	$ 286,199	$ 179,169
Number of Positions as Collateral | Loan	14	9
Weighted Average Interest Rate	2.66%	2.39%
CRE - Term Repurchase Facility | Morgan Stanley Bank | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	$ 140,066	$ 98,991
Value of Collateral	$ 205,561	$ 142,098
Number of Positions as Collateral | Loan	12	7
Weighted Average Interest Rate	3.15%	2.96%
Unamortized Issuance Costs and Discounts	$ 1,300	$ 1,700
CRE - Term Repurchase Facility | RSO Repo SPE Trust 2015 | Repurchase Agreements
Debt Instrument [Line Items]
Unamortized Issuance Costs and Discounts	320	415
Trust Certificate - Term Repurchase Facility | RSO Repo SPE Trust 2015 | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	26,341	26,244
Value of Collateral	$ 89,181	$ 89,181
Number of Positions as Collateral | Loan	1	1
Weighted Average Interest Rate	6.03%	5.85%
RMBS - Term Repurchase Facility | Wells Fargo Bank | Repurchase Agreements
Debt Instrument [Line Items]
Outstanding Borrowings	$ 0	$ 782
Value of Collateral	$ 0	$ 835
Number of Positions as Collateral | Loan	0	1
Weighted Average Interest Rate	0.00%	2.75%

XML

BORROWINGS (Amount at Risk Under Repurchase Facilities) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	7 years 6 months	10 years 7 months 6 days
Weighted Average Interest Rate	3.48%	2.89%
CMBS - Term Repurchase Facilities
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	210 days	1 year 1 month 6 days
Weighted Average Interest Rate	2.67%	1.57%
CRE - Term Repurchase Facility
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	1 year 10 months 24 days	1 year 7 months 6 days
Weighted Average Interest Rate	2.86%	2.64%
Trust Certificate - Term Repurchase Facility
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	2 years 1 month 6 days	2 years 10 months 24 days
Weighted Average Interest Rate	6.03%	5.85%
Repurchase Agreements | Wells Fargo Bank
Debt Instrument [Line Items]
Weighted Average Interest Rate	3.31%	3.03%
Repurchase Agreements | Wells Fargo Securities, LLC
Debt Instrument [Line Items]
Weighted Average Interest Rate	0.00%	1.93%
Repurchase Agreements | Deutsche Bank Securities, LLC
Debt Instrument [Line Items]
Weighted Average Interest Rate	0.00%	2.10%
Repurchase Agreements | New Century Bank
Debt Instrument [Line Items]
Weighted Average Interest Rate	3.50%	3.17%
Linked and Non-linked Transactions | CMBS - Term Repurchase Facilities | Wells Fargo Bank
Debt Instrument [Line Items]
Amount at Risk	$ 5,420	$ 6,053
Weighted Average Remaining Maturity	123 days	1 year 1 month 6 days
Weighted Average Interest Rate	1.82%	1.57%
Linked and Non-linked Transactions | CMBS - Term Repurchase Facilities | Deutsche Bank
Debt Instrument [Line Items]
Amount at Risk	$ 30,672
Weighted Average Remaining Maturity	237 days
Weighted Average Interest Rate	2.93%
Linked and Non-linked Transactions | CRE - Term Repurchase Facility | Wells Fargo Bank
Debt Instrument [Line Items]
Amount at Risk	$ 90,393	$ 54,674
Weighted Average Remaining Maturity	1 year 9 months 18 days	240 days
Weighted Average Interest Rate	2.66%	2.39%
Linked and Non-linked Transactions | CRE - Term Repurchase Facility | Morgan Stanley Bank, National Association
Debt Instrument [Line Items]
Amount at Risk	$ 65,065	$ 41,248
Weighted Average Remaining Maturity	1 year 11 months 12 days	2 years 8 months 12 days
Weighted Average Interest Rate	3.15%	2.96%
Linked and Non-linked Transactions | Trust Certificate - Term Repurchase Facility | RSO Repo SPE Trust 2015
Debt Instrument [Line Items]
Amount at Risk	$ 62,575	$ 62,575
Weighted Average Remaining Maturity	2 years 1 month 6 days	2 years 10 months 24 days
Weighted Average Interest Rate	6.03%	5.85%
Linked and Non-linked Transactions | RMBS - Term Repurchase Facility | Wells Fargo Bank
Debt Instrument [Line Items]
Amount at Risk		$ 54
Weighted Average Remaining Maturity		264 days
Weighted Average Interest Rate		2.75%
Linked and Non-linked Transactions | Repurchase Agreements | Wells Fargo Bank
Debt Instrument [Line Items]
Amount at Risk	$ 62,569	$ 17,811
Weighted Average Remaining Maturity	59 days	134 days
Weighted Average Interest Rate	3.31%	3.03%
Linked and Non-linked Transactions | Repurchase Agreements | Wells Fargo Securities, LLC
Debt Instrument [Line Items]
Amount at Risk		$ 6,288
Weighted Average Remaining Maturity		11 days
Weighted Average Interest Rate		1.93%
Linked and Non-linked Transactions | Repurchase Agreements | Deutsche Bank Securities, LLC
Debt Instrument [Line Items]
Amount at Risk		$ 16,330
Weighted Average Remaining Maturity		20 days
Weighted Average Interest Rate		2.05%
Linked and Non-linked Transactions | Repurchase Agreements | New Century Bank
Debt Instrument [Line Items]
Amount at Risk	$ 10,584	$ 17,322
Weighted Average Remaining Maturity	77 days	124 days
Weighted Average Interest Rate	3.50%	3.17%

XML

BORROWINGS (Contractual Commitments) (Details) - USD ($) $ in Thousands		1 Months Ended	9 Months Ended
		Oct. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Debt Instrument [Line Items]
Total			$ 1,401,842
2016			174,642
2017			77,782
2018			472,656
2019			0
2020 and Thereafter			676,762
Accrued interest expense	[1]		4,913		$ 5,604
Securitizations			0	$ 505,862
Securitizations			(226,570)	$ (374,778)
CRE - Term Repurchase Facility
Debt Instrument [Line Items]
Total			528,972
2016			0
2017			0
2018			0
2019			0
2020 and Thereafter			528,972
Accrued interest expense			410		$ 315
Repurchase Agreements
Debt Instrument [Line Items]
Total			613,734
2016			174,642
2017			77,782
2018			361,310
2019			0
2020 and Thereafter			0
Unsecured Junior Subordinated Debentures
Debt Instrument [Line Items]
Total			51,548
2016			0
2017			0
2018			0
2019			0
2020 and Thereafter			51,548
Convertible Debt | 6.0% Convertible Senior Notes
Debt Instrument [Line Items]
Total			111,346
2016			0
2017			0
2018			111,346
2019			0
2020 and Thereafter			0
Convertible Debt | 8.0% Convertible Senior Notes
Debt Instrument [Line Items]
Total			96,242
2016			0
2017			0
2018			0
2019			0
2020 and Thereafter			$ 96,242
Subsequent Event | RCC CRE Notes 2013 Senior Notes
Debt Instrument [Line Items]
Securitizations		$ 36,600
Securitizations		$ (16,200)

[1] September 30, 2016 December 31, 2015Liabilities of consolidated VIEs included in the total liabilities above: Borrowings $528,971 $1,032,581 Accrued interest expense500 923 Derivatives, at fair value— 3,346 Accounts payable and other liabilities147 (117) Total liabilities of consolidated VIEs$529,618 $1,036,733

XML

BORROWINGS (Narrative) (Details)	1 Months Ended
	Jul. 31, 2016 extension	Dec. 01, 2016 USD ($)	Nov. 01, 2016 USD ($)	Aug. 31, 2016 USD ($)	Aug. 30, 2016 USD ($)
Debt Instrument [Line Items]
Number of extensions | extension	3
Period of time	1 year
Wells Fargo Bank | Primary Capital Mortgage LLC
Debt Instrument [Line Items]
Maximum amount of facility				$ 50,000,000	$ 65,000,000
Subsequent Event | Wells Fargo Bank | Primary Capital Mortgage LLC
Debt Instrument [Line Items]
Maximum amount of facility			$ 35,000,000
Scenario, Forecast | Wells Fargo Bank | Primary Capital Mortgage LLC
Debt Instrument [Line Items]
Maximum amount of facility		$ 25,000,000

XML

SHARE ISSUANCE AND REPURCHASE (Details) - $ / shares	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Preferred Shares - Series A
Class of Stock [Line Items]
Stock issued during period, shares, new issues (in shares)	0
Stock issued during period, weighted average offering price per share, new issues (in usd per share)	$ 0.00
Preferred stock, shares outstanding (in shares)	1,069,016	1,069,016
Weighted Average Offering Price (in usd per share)	$ 24.29
Preferred stock, coupon authorized (in hundredths)	8.50%
Preferred Shares - Series B
Class of Stock [Line Items]
Stock issued during period, shares, new issues (in shares)	195,900
Stock issued during period, weighted average offering price per share, new issues (in usd per share)	$ 15.80
Preferred stock, shares outstanding (in shares)	5,544,579	5,740,479
Weighted Average Offering Price (in usd per share)	$ 24.02
Preferred stock, coupon authorized (in hundredths)	8.25%
Preferred Shares - Series C
Class of Stock [Line Items]
Stock issued during period, shares, new issues (in shares)	0
Stock issued during period, weighted average offering price per share, new issues (in usd per share)	$ 0.00
Preferred stock, shares outstanding (in shares)	4,800,000	4,800,000
Weighted Average Offering Price (in usd per share)	$ 25.00
Preferred stock, coupon authorized (in hundredths)	8.625%

XML

SHARE ISSUANCE AND REPURCHASE (Narrative) (Details) - USD ($)	3 Months Ended	9 Months Ended	14 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Aug. 03, 2015	Mar. 21, 2013
Class of Stock [Line Items]
Shares issued from dividend reinvestment plan (in shares)	3,000	9,000
Proceeds from dividend reinvestment plan	$ 40,000	$ 110,000
Treasury stock, value		$ 9,200,000	$ 35,200,000
Treasury stock, (in shares)		800,000	2,800,000
Outstanding shares, stock acquired, percentage			8.30%
Preferred Shares - Series A
Class of Stock [Line Items]
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00	$ 25.00		$ 25
Preferred Shares - Series B
Class of Stock [Line Items]
Preferred stock, liquidation preference (in dollars per share)	25.00	$ 25.00	25.00		25
Treasury stock, value		$ 3,100,000
Treasury stock, (in shares)		196,000
Outstanding shares, stock acquired, percentage		3.40%
Preferred Shares - Series C
Class of Stock [Line Items]
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00	$ 25.00		$ 25
Dividend Reinvestment Plan March 21 2013 | Common Stock
Class of Stock [Line Items]
Shares authorized for dividend reinvestment plan (in shares)							5,000,000
Equity and Debt Securities Repurchase Program
Class of Stock [Line Items]
Stock repurchase program, authorized amount				$ 50,000,000		$ 50,000,000.0

XML

SHARE-BASED COMPENSATION (Details) $ in Thousands				3 Months Ended		9 Months Ended
	Aug. 31, 2015	Aug. 03, 2015	Oct. 31, 2013 USD ($)	Sep. 30, 2016 USD ($) shares	Sep. 30, 2015 USD ($) shares	Sep. 30, 2016 USD ($) Director shares	Sep. 30, 2015 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock split, conversion ratio	0.25	4
Allocated share-based compensation expense				$ 555
Cash awards, percentage						75.00%
Common stock awards, percentage						25.00%
Shares issued pursuant to the Management agreement (in shares) | shares				0	0	0	0
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated fair value of shares granted						$ 2,300	$ 4,900
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term						10 years
Loan Origination Performance Plan | Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock split, conversion ratio						0.25
Equity Compensation Expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense				$ 63	$ 177	$ 900	528
General and Administrative Expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense				38	50	115	136
Primary Capital Mortgage LLC
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payments to acquire businesses			$ 7,600
Issuance of restricted stock			$ 800
Employees | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payment award, grant date fair value						$ 483	737
Non-Employee Directors (1) | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of non employee directors granted shares (directors) | Director						8
Payment award, grant date fair value						$ 290	256
Non-Employee Directors (1) | Equity Compensation Expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense				64	$ 64	192	$ 193
Manager and Non Employees | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost not yet recognized				$ 2,200		$ 2,200
Weighted Average Remaining Contractual Term (in years)						2 years 15 days
Vested
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Remaining Contractual Term (in years)						2 years 2 months 12 days

XML

SHARE-BASED COMPENSATION (Restricted Stock Activity) (Details) $ in Thousands			9 Months Ended
	Mar. 31, 2016 shares	Sep. 24, 2014 period shares	Sep. 30, 2016 shares	Apr. 30, 2016 USD ($)
January 21, 2016 | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			130,903
Vesting/Year			33.30%
January 21, 2016 | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			50,784
Vesting/Year			33.30%
February 1, 2016 | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			3,421
Vesting/Year			100.00%
February 5, 2016 | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			90,595
Vesting/Year			33.30%
March 8, 2016 | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			13,912
Vesting/Year			100.00%
March 14, 2016 | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			3,158
Vesting/Year			100.00%
March 31, 2016 | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			8,840
Vesting/Year			100.00%
June 6, 2016 | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			2,702
Vesting/Year			100.00%
Grant Date, Range Nine [Member] | 2007 Omnibus Equity Compensation Plan | Restricted Stock
Restricted common stock transactions [Roll Forward]
Stock based compensation (in shares)			2,755
Vesting/Year			100.00%
Non-Employee Directors (1)
Restricted common stock transactions [Roll Forward]
Unvested shares, beginning of period (in shares)			15,267
Issued (shares)			25,948
Vested (shares)			(13,895)
Forfeited (shares)			0
Unvested shares, end of period (in shares)			27,320
Non-Employees
Restricted common stock transactions [Roll Forward]
Unvested shares, beginning of period (in shares)			617,657
Issued (shares)			230,338
Vested (shares)			(469,074)
Forfeited (shares)			(262)
Unvested shares, end of period (in shares)			378,659
Employees
Restricted common stock transactions [Roll Forward]
Unvested shares, beginning of period (in shares)			58,445
Issued (shares)			50,784
Vested (shares)			(18,452)
Forfeited (shares)			0
Unvested shares, end of period (in shares)			90,777
Manager and Non Employees
Restricted common stock transactions [Roll Forward]
Unvested shares, beginning of period (in shares)			691,369
Issued (shares)			307,070
Vested (shares)			(501,421)
Forfeited (shares)			(262)
Unvested shares, end of period (in shares)			496,756
Common Stock | Loan Origination Performance Plan
Restricted common stock transactions [Roll Forward]
Number of additional shares authorized (in shares)		17,682
Annual measurement periods | period		2
Share grants on achievement of performance threshold, Tier II (in shares)	8,840
Dividends Payable on performance shares granted and earned | $				$ 42

XML

SHARE-BASED COMPENSATION (Status of Vested Stock Options) (Details) - Vested $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Stock options outstanding [Roll Forward]
Outstanding beginning of period (in shares) | shares	26,250
Vested (in shares) | shares	0
Exercised (in shares) | shares	0
Forfeited (in shares) | shares	0
Expired (in shares) | shares	0
Outstanding end of period (in shares) | shares	26,250
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding beginning of period (in dollars per share) | $ / shares	$ 46.60
Vested (in dollars per share) | $ / shares	0.00
Exercised (in dollars per share) | $ / shares	0.00
Forfeited (usd per share) | $ / shares	0.00
Expired (in shares) | $ / shares	0.00
Outstanding end of period (in dollars per share) | $ / shares	$ 46.60
Weighted Average Remaining Contractual Term (in years)	2 years 2 months 12 days
Aggregate Intrinsic Value (in thousands) | $	$ 0

XML

SHARE-BASED COMPENSATION (Components of Equity Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity compensation expense	$ 1,766	$ (225)	$ 4,444	$ 1,561
Manager and Non Employees | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity compensation expense	1,639	(466)	3,352	840
Employees | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity compensation expense	63	177	900	528
Non-Employee Directors (1) | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity compensation expense	64	$ 64	192	$ 193
Share-based Compensation Award, Accelerated Vesting | Manager and Non Employees | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity compensation expense	$ 896		$ 896

XML

EARNINGS PER SHARE (Details) $ / shares in Units, $ in Thousands			3 Months Ended		9 Months Ended
	Aug. 31, 2015	Aug. 03, 2015	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) $ / shares shares	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) $ / shares shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock split, conversion ratio	0.25	4
Antidilutive securities excluded (in shares)			294,462	0	352,225	349,249
Basic:
Net income (loss) allocable to common shares | $			$ (51,573)	$ 6,778	$ (43,436)	$ (14,831)
Weighted average number of shares outstanding			30,528,368	32,515,226	30,513,131	32,726,194
Basic net income (loss) per share (in dollars per share) | $ / shares			$ (1.69)	$ 0.21	$ (1.42)	$ (0.45)
Diluted:
Net income (loss) allocable to common shares | $			$ (51,573)	$ 6,778	$ (43,436)	$ (14,831)
Weighted average number of shares outstanding			30,528,368	32,515,226	30,513,131	32,726,194
Additional shares due to assumed conversion of dilutive instruments			0	435,991	0	0
Adjusted weighted-average number of common shares outstanding			30,528,368	32,951,217	30,513,131	32,726,194
Diluted net income (loss) per share (in dollars per share) | $ / shares			$ (1.69)	$ 0.21	$ (1.42)	$ (0.45)
Six Percent and Eight Convertible Senior Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded (in shares)			9,002,864	9,002,864	9,002,864,000
6.0% Convertible Senior Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Interest date, stated percentage			6.00%		6.00%
8.0% Convertible Senior Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Interest date, stated percentage			8.00%		8.00%

XML

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
January 1, 2016 (as adjusted)			$ (966)
Unrealized gains on derivatives, net	$ 1	$ 1,080	118	$ 3,424
Unrealized gains (losses) on available-for-sale securities, net	6,182	(1,769)	8,382	(345)
Foreign currency translation adjustment	0	(86)	0	343
Other comprehensive gain (loss) before reclassifications			8,500
Reclassification adjustments associated with unrealized (gains) losses from interest rate hedges included in net income	26	412	(29)	538
Reclassification adjustment for realized (gains) losses on available-for-sale securities included in net income	0	$ (1,805)	(596)	$ (12,139)
Amounts reclassified from accumulated other comprehensive income			(625)
September 30, 2016	6,909		6,909
Net unrealized (loss) gain on derivatives
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
January 1, 2016 (as adjusted)			(131)
Unrealized gains on derivatives, net			118
Reclassification adjustments associated with unrealized (gains) losses from interest rate hedges included in net income			(29)
September 30, 2016	(42)		(42)
Net unrealized (loss) gain on securities, available-for-sale
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
January 1, 2016 (as adjusted)			(835)
Unrealized gains (losses) on available-for-sale securities, net			8,382
Reclassification adjustment for realized (gains) losses on available-for-sale securities included in net income			(596)
September 30, 2016	6,951		6,951
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
January 1, 2016 (as adjusted)			0
Foreign currency translation adjustment			0
September 30, 2016	$ 0		$ 0

XML

RELATED PARTY TRANSACTIONS (Relationship with Resource America) (Details) € in Millions			1 Months Ended			3 Months Ended			9 Months Ended			12 Months Ended
		Nov. 07, 2013 USD ($) shares	May 31, 2016 USD ($)	Sep. 30, 2014 USD ($)	Dec. 31, 2012 USD ($)	Sep. 30, 2016 USD ($) Transaction shares		Sep. 30, 2015 USD ($) Transaction	Sep. 30, 2016 USD ($) Transaction shares		Sep. 30, 2015 USD ($) Transaction	Dec. 31, 2015 USD ($)		Sep. 30, 2016 EUR (€) Transaction shares	Sep. 08, 2016 USD ($)	Jan. 01, 2016 USD ($) Transaction	Dec. 15, 2015 USD ($)	Aug. 04, 2015 USD ($) Loan	Apr. 30, 2015 USD ($)	Oct. 31, 2014 Transaction	Nov. 16, 2011 USD ($)	Jun. 17, 2011 USD ($)	Nov. 24, 2010 USD ($)
Related Party Transaction [Line Items]
Provision (recovery) for loan and lease losses									$ 19,819,000			$ 49,889,000
Direct financing leases, net of allowances	[1]					$ 571,000			571,000			931,000
Base management fees paid by the Company						3,053,000		$ 3,252,000	10,189,000		$ 10,312,000
General and administrative						12,341,000		10,223,000	33,353,000		29,641,000
Sale (purchase) of and principal payments on securities, trading, net									(229,000)		3,120,000
Investment securities, trading	[1]					3,747,000			3,747,000			25,550,000
Loans held for sale						197,615,000			197,615,000			95,946,000
Equity in Earnings of Unconsolidated Subsidiaries						396,000		(276,000)	4,022,000		(103,000)
Investments in unconsolidated entities						88,149,000	[1]		$ 88,149,000	[1]		50,030,000	[1]				$ 1,300,000		$ 750,000
Payment for structuring and placement fee			$ 2,300,000
Resource America
Related Party Transaction [Line Items]
Loan origination fee									2.00%
Manager pursuant to the Management Agreement
Related Party Transaction [Line Items]
Related party, expense reimbursements, annual Fee					$ 550,000
Related party, expense reimbursements, annual fee, term					2 years
Resource Capital Corp | Lease Equity Appreciation Fund II
Related Party Transaction [Line Items]
Direct financing leases, net of allowances	[1]					$ 571,000			$ 571,000
Resource Capital Corp | Resource America
Related Party Transaction [Line Items]
Number of common shares of the Company owned by a related party (in shares) | shares						715,396			715,396					715,396
Ownership percentage (percent)						2.30%			2.30%					2.30%
Due from related parties															$ 1,500,000
Resource Capital Corp | Manager pursuant to the Management Agreement
Related Party Transaction [Line Items]
Base management fees paid by the Company						$ 2,900,000		3,100,000	$ 9,800,000		9,800,000
Incentive management fees						0		0	0		0
General and administrative						1,400,000		$ 1,300,000	4,000,000		$ 4,000,000
Investment maximum																							$ 5,000,000
Additional investment per Investment Management Agreement																						$ 8,000,000
Management fee as a percentage of net profits in excess of preferred return (percent)																							20.00%
Total indebtedness						1,500,000			1,500,000			2,500,000
Accrued base management fees						948,000			948,000			978,000
Expense reimbursement payable						$ 600,000			$ 600,000			1,600,000
Number of executed CDO transactions (transactions) | Transaction						8		1	8		1			8						1
Number of liquidated CDO transactions | Transaction						2			2					2
Number of deconsolidated CDO transactions | Transaction																2
Resource Capital Corp | Resource Capital Markets, Inc.
Related Party Transaction [Line Items]
Base management fees paid by the Company						$ 0			$ 0
Sale (purchase) of and principal payments on securities, trading, net									0
Investment securities, trading						3,700,000			3,700,000			3,700,000
Expense reimbursements						1,000		$ 21,000	9,000		$ 118,000
Total indebtedness						77,000			77,000			152,000
Due to related parties						$ 0			$ 0			93,000
Elevation Home Loans, LLC
Related Party Transaction [Line Items]
Purchase of membership interests		$ 830,000
Purchase of membership interests, number of shares of restricted Company common stock issued as consideration | shares		34,165
Harvest CLO XV
Related Party Transaction [Line Items]
Investments in unconsolidated entities | €														€ 12.5
Collateralized loan obligation, par value			$ 413,000,000
Investment in LCC Preferred Stock
Related Party Transaction [Line Items]
Ownership percentage (percent)						29.00%			29.00%					29.00%
Equity in Earnings of Unconsolidated Subsidiaries						$ 415,000		961,000	$ 2,759,000		1,362,000
Investments in unconsolidated entities						$ 44,777,000			$ 44,777,000			42,017,000									$ 36,300,000
Pelium
Related Party Transaction [Line Items]
Ownership percentage (percent)				80.40%		80.20%			80.20%					80.20%
Investment securities, trading																$ 21,900,000
Acquisition of membership interests				$ 17,500,000
Equity in Earnings of Unconsolidated Subsidiaries						$ 1,045,000		0	$ 2,765,000		0
Investments in unconsolidated entities						$ 24,767,000			$ 24,767,000			0
Contributions				$ 40,000,000
Ownership interest				10.00%
Ownership interest increase						20.00%			20.00%					20.00%
Investment in CVC Global Credit Opportunities Fund
Related Party Transaction [Line Items]
Ownership percentage (percent)						0.00%			0.00%					0.00%
Equity in Earnings of Unconsolidated Subsidiaries						$ 0		$ (628,000)	$ 0		$ 293,000
Investments in unconsolidated entities						0			0			0
Commercial Real Estate Lending | Resource Real Estate
Related Party Transaction [Line Items]
Related party transaction, due from (to) related party						0			0			$ 2,500
Middle Market Loans
Related Party Transaction [Line Items]
Number of loans | Loan																		1
Loans held for sale						$ 7,182,000			$ 7,182,000									$ 257,300,000

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

RELATED PARTY TRANSACTIONS (Relationship with LEAF Financial) (Details) - USD ($)								3 Months Ended			9 Months Ended			12 Months Ended
		Feb. 15, 2016	Jan. 11, 2013	Feb. 15, 2012	Feb. 14, 2012	Sep. 03, 2011	Mar. 05, 2010	Sep. 30, 2016		Sep. 30, 2015	Sep. 30, 2016		Sep. 30, 2015	Dec. 31, 2015		Dec. 31, 2014	Mar. 05, 2011	Dec. 15, 2015	Apr. 30, 2015	Nov. 16, 2011
Related Party Transaction [Line Items]
Income (Loss) and Interest Expense from Equity Method Investments								$ 396,000		$ (276,000)	$ 4,022,000		$ (103,000)
Investments in unconsolidated entities								88,149,000	[1]		88,149,000	[1]		$ 50,030,000	[1]			$ 1,300,000	$ 750,000
Provision (recovery) for loan and lease losses											19,819,000			49,889,000
Leases								(22,000)		(8,000)	(37,000)		250,000			$ 2,100,000
Direct financing leases, net of allowances	[1]							571,000			571,000			931,000
Lease Equity Appreciation Fund II
Related Party Transaction [Line Items]
Line of credit facility, commitment fee percentage							1.00%
Resource Capital Corp | Lease Equity Appreciation Fund II
Related Party Transaction [Line Items]
Maximum amount of facility							$ 8,000,000.0
Line of credit facility, term (in years)																	1 year
Interest rate during period (in hundredths)				10.00%	12.00%
Line of credit facility, extension fee percentage (in hundredths)		1.00%	1.00%			1.00%
Direct financing leases, net of allowances	[1]							571,000			571,000
Investment in LCC Preferred Stock
Related Party Transaction [Line Items]
Income (Loss) and Interest Expense from Equity Method Investments								415,000		961,000	2,759,000		1,362,000
Investments in unconsolidated entities								44,777,000			44,777,000			$ 42,017,000						$ 36,300,000
Loans Receivable-Related Party | Resource Capital Corp | Lease Equity Appreciation Fund II
Related Party Transaction [Line Items]
Provision (recovery) for loan and lease losses								$ 0		$ 0	$ 0		$ (216,000)			$ 1,300,000

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

RELATED PARTY TRANSACTIONS (Relationship with CVC Credit Partners, LLC) (Details) $ in Thousands		1 Months Ended										3 Months Ended				9 Months Ended			12 Months Ended
	Feb. 24, 2011 USD ($)	Sep. 30, 2016 USD ($) Entity		Jan. 31, 2016 USD ($)	Dec. 31, 2015 USD ($) Entity		Oct. 31, 2015 USD ($)	Jul. 31, 2015 USD ($)	Mar. 31, 2015 USD ($)	May 31, 2013	Oct. 31, 2012 Entity	Sep. 30, 2016 USD ($) Entity		Sep. 30, 2015 USD ($)	Jul. 31, 2013 USD ($)	Sep. 30, 2016 USD ($) Entity		Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) Entity		Dec. 15, 2015 USD ($)	Apr. 30, 2015 USD ($)	Dec. 31, 2013 Entity	Nov. 16, 2011 USD ($)
Related Party Transaction [Line Items]
Number of CLO issuers | Entity		5			5						1	5				5			5				2
Income (Loss) and Interest Expense from Equity Method Investments												$ (396)		$ 276		$ (4,022)		$ 103
Proceeds from sale of Northport TRS, LLC																104,187		0
Investments in unconsolidated entities		$ 88,149	[1]		$ 50,030	[1]						88,149	[1]			88,149	[1]		$ 50,030	[1]	$ 1,300	$ 750
Churchill Pacific Asset Management LLC
Related Party Transaction [Line Items]
Assets under management, carrying amount		$ 1,900,000										$ 1,900,000				$ 1,900,000
CVC Credit Partners, LLC
Related Party Transaction [Line Items]
Asset management fees percentage (in hundredths)		1.50%										1.50%				1.50%
Resource America | CVC Capital Partners
Related Party Transaction [Line Items]
Ownership percentage (percent)		24.00%										24.00%				24.00%
Resource Capital Corp
Related Party Transaction [Line Items]
Preferred equity interest acquired											66.60%
Resource Capital Corp | Churchill Pacific Asset Management LLC
Related Party Transaction [Line Items]
Ownership percentage (percent)	100.00%
Purchase price of acquired entity paid by acquiring entity	$ 22,500
Apidos Capital Management LLC | CVC Capital Partners
Related Party Transaction [Line Items]
Percentage of subordinated fees the company is entitled to collect (in hundredths)		10.00%										10.00%				10.00%
Percentage of incentive fees the company is entitled to collect (in hundredths)		50.00%										50.00%				50.00%
Subordinated fees received												$ 254		173		$ 561		631
Whitney CLO I
Related Party Transaction [Line Items]
Ownership percentage in VIE										68.30%
Investment in LCC Preferred Stock
Related Party Transaction [Line Items]
Ownership percentage (percent)		29.00%										29.00%				29.00%
Income (Loss) and Interest Expense from Equity Method Investments												$ (415)		(961)		$ (2,759)		(1,362)
Investments in unconsolidated entities		$ 44,777			42,017							$ 44,777				$ 44,777			42,017					$ 36,300
Investment in CVC Global Credit Opportunities Fund
Related Party Transaction [Line Items]
Ownership percentage (percent)		0.00%										0.00%				0.00%
Income (Loss) and Interest Expense from Equity Method Investments												$ 0		$ 628		$ 0		$ (293)
Proceeds from sale of Northport TRS, LLC					8,600		$ 4,000	$ 625	$ 5,000
Investments in unconsolidated entities		$ 0			$ 0							0				$ 0			0
Investment in CVC Global Credit Opportunities Fund | Variable Interest Entity, Not Primary Beneficiary
Related Party Transaction [Line Items]
Acquisition of membership interests															$ 15,000
Management Contracts
Related Party Transaction [Line Items]
Impairment of intangible assets		1,500		$ 2,400								$ 1,500							$ 2,400
Investment in RCAM, Investment Two
Related Party Transaction [Line Items]
Impairment of intangible assets		$ 2,200

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

RELATED PARTY TRANSACTIONS (Relationship with Resource Real Estate) (Details)													1 Months Ended				3 Months Ended			9 Months Ended			12 Months Ended
		Aug. 18, 2015 USD ($)	Jun. 24, 2015 USD ($)	Apr. 10, 2015 USD ($) Loan option fund	Feb. 24, 2015 USD ($)	Feb. 01, 2015 USD ($)	Jul. 30, 2014 USD ($)	Feb. 15, 2012	Feb. 14, 2012	Mar. 05, 2010	Jan. 15, 2010 USD ($) extension	Dec. 01, 2009 USD ($)	Jul. 31, 2016 extension	Sep. 30, 2014 USD ($)	Jul. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Sep. 30, 2016 USD ($) Director Transaction		Sep. 30, 2015 USD ($) Transaction	Sep. 30, 2016 USD ($) Director Transaction		Sep. 30, 2015 USD ($) Transaction	Dec. 31, 2015 USD ($)		Dec. 31, 2014 USD ($)	Dec. 15, 2015 USD ($)	Apr. 30, 2015 USD ($)	Oct. 31, 2014 Transaction	Jul. 09, 2014
Related Party Transaction [Line Items]
Direct financing leases, net of allowances	[1]																$ 571,000			$ 571,000			$ 931,000
Number of options to extend | option				2
Option to extend				1 year
Base management fees paid by the Company																	3,053,000		$ 3,252,000	10,189,000		$ 10,312,000
Equity in Earnings of Unconsolidated Subsidiaries																	396,000		(276,000)	4,022,000		(103,000)
Equity in earnings of unconsolidated subsidiaries																	1,032,000		334,000	5,950,000		1,702,000
Investments in unconsolidated entities																	88,149,000	[1]		88,149,000	[1]		50,030,000	[1]		$ 1,300,000	$ 750,000
Number of bridge loans | Loan				2
Number of Funds | fund				2
Number of extensions | extension													3
Period of time													1 year
Placement agent fee							$ 175,000									$ 205,000
Provision (recovery) for loan and lease losses																				19,819,000			49,889,000
Resource America
Related Party Transaction [Line Items]
Payments to acquire additional interest in subsidiaries														$ 2,800,000
Investment in CVC Global Credit Opportunities Fund
Related Party Transaction [Line Items]
Equity in Earnings of Unconsolidated Subsidiaries																	$ 0		(628,000)	$ 0		293,000
Ownership percentage (percent)																	0.00%			0.00%
Investments in unconsolidated entities																	$ 0			$ 0			0
Pelium
Related Party Transaction [Line Items]
Equity in Earnings of Unconsolidated Subsidiaries																	$ 1,045,000		0	$ 2,765,000		0
Ownership percentage (percent)														80.40%			80.20%			80.20%
Equity in earnings of unconsolidated subsidiaries																	$ 1,000,000			$ 2,800,000
Investments in unconsolidated entities																	$ 24,767,000			$ 24,767,000			0
Payments to acquire additional interest in subsidiaries						$ 2,500,000
Acquisition of membership interests														$ 17,500,000
Ownership interest														10.00%
Ownership percentage														5 years
Ownership interest increase																	20.00%			20.00%
Contributions														$ 40,000,000
RRE VIP Borrower, LLC
Related Party Transaction [Line Items]
Equity in Earnings of Unconsolidated Subsidiaries																	$ 0		0	$ 35,000		46,000
Ownership percentage (percent)																	0.00%			0.00%
Investments in unconsolidated entities																	$ 0			$ 0			0
Acquisition of membership interests												$ 2,100,000
RCC Residential, Inc.
Related Party Transaction [Line Items]
Ownership percentage (percent)																													63.80%
Equity in earnings of unconsolidated subsidiaries																	(560,000)			(160,000)
Acquisition of membership interests															$ 15,000,000
Pearlmark Mezzanine Realty Partners IV, L.P.
Related Party Transaction [Line Items]
Equity in Earnings of Unconsolidated Subsidiaries																	$ 132,000		0	$ 552,000		0
Ownership percentage (percent)																	47.70%			47.70%
Equity in earnings of unconsolidated subsidiaries																	$ 132,000			$ 552,000
Investments in unconsolidated entities																	16,751,000			16,751,000			6,465,000
Other commitment			$ 50,000,000
Acquisition of membership interests																				17,800,000
Property ,anagement fee, percent fee			1.00%
Management fee, invested capital, percent fee			1.50%
Rebate, percentage			25.00%
Investment management fees payable																	268,000			268,000
Lease Equity Appreciation Fund II
Related Party Transaction [Line Items]
Line of credit facility, commitment fee percentage										1.00%
Lease Equity Appreciation Fund II | Resource Capital Corp
Related Party Transaction [Line Items]
Direct financing leases, net of allowances	[1]																$ 571,000			$ 571,000
Interest rate during period (in hundredths)								10.00%	12.00%
CVC Capital Partners | Resource America
Related Party Transaction [Line Items]
Ownership percentage (percent)																	24.00%			24.00%
Resource America | Resource Capital Corp
Related Party Transaction [Line Items]
Ownership percentage (percent)																	2.30%			2.30%
Resource America | Pearlmark Mezzanine Realty Partners IV, L.P.
Related Party Transaction [Line Items]
Ownership percentage in VIE			50.00%
Manager pursuant to the Management Agreement | Resource Capital Corp
Related Party Transaction [Line Items]
Base management fees paid by the Company																	$ 2,900,000		3,100,000	$ 9,800,000		9,800,000
Incentive management fees																	$ 0		$ 0	$ 0		$ 0
Number of liquidated CDO transactions | Transaction																	2			2
Number of executed CDO transactions (transactions) | Transaction																	8		1	8		1						1
Resource Real Estate Management, LLC | RRE VIP Borrower, LLC
Related Party Transaction [Line Items]
Asset management fees percentage (in hundredths)																	1.00%			1.00%
Base management fees paid by the Company																	$ 0
Resource Real Estate Management, LLC | Varde Investment Partners, L.P
Related Party Transaction [Line Items]
Base management fees paid by the Company																	$ 0
Resource Capital Partners Inc | Resource Capital Corp
Related Party Transaction [Line Items]
Amount of loan to related party											$ 2,000,000
Interest date, stated percentage																	8.00%			8.00%
Related party loan, additional interest in addition to stated interest rate (in hundredths)																	5.00%			5.00%
Number of extensions | extension											2
Period of time											1 year
Resource Real Estate Opportunity Fund, L.P. | Resource America
Related Party Transaction [Line Items]
Ownership percentage (percent)											5.00%
RCC CRE Notes 2013 Senior Notes
Related Party Transaction [Line Items]
Closing transaction amount																$ 307,800,000
Special servicing fee rate																0.25%
RCC 2014-CRE2 Senior Notes
Related Party Transaction [Line Items]
Closing transaction amount							$ 353,900,000
RCC 2015-CRE3
Related Party Transaction [Line Items]
Closing transaction amount					$ 346,200,000
Placement agent fee					$ 100,000
RCC 2015-CRE4
Related Party Transaction [Line Items]
Closing transaction amount		$ 312,900,000
Placement agent fee		$ 85,000
Loans Receivable-Related Party | Lease Equity Appreciation Fund II | Resource Capital Corp
Related Party Transaction [Line Items]
Provision (recovery) for loan and lease losses																	$ 0		$ 0	$ 0		$ (216,000)			$ 1,300,000
Commercial Real Estate Lending | Resource Real Estate
Related Party Transaction [Line Items]
Related party transaction, due from (to) related party																	0			0			$ 2,500
Whispertree Apartments | Resource Real Estate Management, LLC | RCC Real Estate
Related Party Transaction [Line Items]
Base management fees paid by the Company																	$ 0
RCM Global, LLC | RCC Residential, Inc.
Related Party Transaction [Line Items]
Gain on sale of investments																				5,000,000
Variable Interest Entity, Distribution																				$ 620,000
Ownership percentage in VIE															63.80%					28.60%
Variable interest entity, total number of board positions | Director																	5			5
Variable interest entity, approval number of board positions | Director																	3			3
Bridge Loan One | Bridge Loan
Related Party Transaction [Line Items]
Basis spread on variable rate				5.75%
Bridge loan				$ 2,500,000
Bridge Loan Two | Bridge Loan
Related Party Transaction [Line Items]
Bridge loan				$ 3,300,000
Minimum | London Interbank Offered Rate (LIBOR)
Related Party Transaction [Line Items]
Basis spread on variable rate				0.25%

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

RELATED PARTY TRANSACTIONS (Relationship with Law Firm) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Resource Capital Corp | Ledgewood
Related Party Transaction [Line Items]
Legal fees	$ 137	$ 13	$ 305	$ 348

XML

DISTRIBUTIONS Dividends Declared (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015
Common Stock
Class of Stock [Line Items]
Total Dividend Paid	$ 13,012	$ 13,051	$ 13,073	$ 13,274	$ 20,667	$ 21,426	$ 21,444
Dividend Per Share (in $ per share)	$ 0.42	$ 0.42	$ 0.42	$ 0.42	$ 0.64	$ 0.64	$ 0.64
Preferred Shares - Series A
Class of Stock [Line Items]
Total Dividend Paid	$ 568	$ 568	$ 568	$ 568	$ 568	$ 568	$ 568
Dividend Per Share (in $ per share)	$ 0.531250	$ 0.531250	$ 0.531250	$ 0.531250	$ 0.531250	$ 0.531250	$ 0.531250
Preferred Shares - Series B
Class of Stock [Line Items]
Total Dividend Paid	$ 2,859	$ 2,859	$ 2,859	$ 2,960	$ 2,960	$ 2,960	$ 2,960
Dividend Per Share (in $ per share)	$ 0.515625	$ 0.515625	$ 0.515625	$ 0.515625	$ 0.515625	$ 0.515625	$ 0.515625
Series C Preferred Stock
Class of Stock [Line Items]
Total Dividend Paid	$ 2,588	$ 2,588	$ 2,588	$ 2,588	$ 2,588	$ 2,588	$ 2,588
Dividend Per Share (in $ per share)	$ 0.539063	$ 0.539063	$ 0.539063	$ 0.539063	$ 0.539063	$ 0.539063	$ 0.539063

XML

DISTRIBUTIONS Narrative (Details)			3 Months Ended							9 Months Ended
	Aug. 31, 2015	Aug. 03, 2015	Sep. 30, 2016 $ / shares	Jun. 30, 2016 $ / shares	Mar. 31, 2016 $ / shares	Dec. 31, 2015 $ / shares	Sep. 30, 2015 $ / shares	Jun. 30, 2015 $ / shares	Mar. 31, 2015 $ / shares	Sep. 30, 2016
Class of Stock [Line Items]
Stock split, conversion ratio	0.25	4
REIT required taxable income distribution, percentage										90.00%
REIT taxable income distribution for exempt federal income taxes, percentage										100.00%
Common Stock
Class of Stock [Line Items]
Dividend Per Share (in $ per share)			$ 0.42	$ 0.42	$ 0.42	$ 0.42	$ 0.64	$ 0.64	$ 0.64

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)		3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Average pull-through rate, assets	83.60%	83.60%		83.60%
Average pull-through rate, liabilities	90.50%	90.50%		90.50%
Investment securities available-for-sale	$ 236,705,000	$ 236,705,000		$ 236,705,000		$ 208,088,000
Provision (recovery) for loan and lease losses		7,683,000	$ 1,034,000	19,819,000	$ 43,834,000
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers into Level 3				1,798,000
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	434,937,000	434,937,000		434,937,000		333,030,000
Investment securities available-for-sale	236,705,000	236,705,000		236,705,000		208,088,000
Recurring Basis | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	138,374,000	138,374,000		138,374,000		71,865,000
Investment securities available-for-sale	0	0		0		4,451,000
Recurring Basis | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	296,563,000	296,563,000		296,563,000		261,165,000
Investment securities available-for-sale	236,705,000	236,705,000		236,705,000		203,637,000
Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	62,540,000	62,540,000		62,540,000		131,127,000
Nonrecurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	2,557,000	2,557,000		2,557,000		1,541,000
Nonrecurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	$ 59,983,000	59,983,000		59,983,000		129,586,000
Provision (recovery) for loan and lease losses		$ 8,000,000	920,000	$ 8,100,000	42,400,000
8.0% Convertible Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate				8.60%
Interest date, stated percentage	8.00%	8.00%		8.00%
6.0% Convertible Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate				7.00%
Interest date, stated percentage	6.00%	6.00%		6.00%
Assets Held-for-sale | Nonrecurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Provision (recovery) for loan and lease losses		$ 9,600,000	$ 35,000	$ 21,800,000	$ 841,000
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, comparability adjustments				0.50%
Minimum | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, EBITDA				3.5
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, comparability adjustments				7.30%
Maximum | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, EBITDA				4.5
Expected Future Cash Flows | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate				15.00%
Expected Future Cash Flows | Minimum | Unsecured Junior Subordinated Debentures
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate				13.14%
Expected Future Cash Flows | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate				25.00%
Expected Future Cash Flows | Maximum | Unsecured Junior Subordinated Debentures
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate				13.15%
Structured Finance Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized gain (loss) on investments				$ 86,000
Structured Finance Securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers into Level 3				0
Held for Sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized gain (loss) on investments				(33,000)
Held for Sale | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers into Level 3
Interest Rate Lock Commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized gain (loss) on investments				0
Interest Rate Lock Commitments | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers into Level 3				0
Forwards - Residential Mortgage Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized gain (loss) on investments				0
Forwards - Residential Mortgage Loans | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers into Level 3				$ 0
Derivative Financial Instruments, Liabilities | Option pricing model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value						$ 1,100,000
Fair value assumptions, expected volatility rate	50.00%
Fair value assumptions, market capitalization	$ 172,700,000

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets and Liabilities Measured at Fair Value) (Details) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Assets:
Investment securities, trading	[1]	$ 3,747	$ 25,550
Investment securities available-for-sale		236,705	208,088
Derivatives	[1]	4,052	3,446
Recurring Basis
Assets:
Investment securities, trading		3,747	25,550
Investment securities available-for-sale		236,705	208,088
Loans held for sale		190,433	95,946
Derivatives		4,052	3,446
Total assets at fair value		434,937	333,030
Liabilities:
Derivatives		2,158	3,941
Total liabilities at fair value		2,158	3,941
Recurring Basis | Level 1
Assets:
Investment securities, trading		0	0
Investment securities available-for-sale		0	0
Loans held for sale		0	0
Derivatives		0	0
Total assets at fair value		0	0
Liabilities:
Derivatives		0	0
Total liabilities at fair value		0	0
Recurring Basis | Level 2
Assets:
Investment securities, trading		0	0
Investment securities available-for-sale		0	4,451
Loans held for sale		138,209	66,588
Derivatives		165	826
Total assets at fair value		138,374	71,865
Liabilities:
Derivatives		1,819	0
Total liabilities at fair value		1,819	0
Recurring Basis | Level 3
Assets:
Investment securities, trading		3,747	25,550
Investment securities available-for-sale		236,705	203,637
Loans held for sale		52,224	29,358
Derivatives		3,887	2,620
Total assets at fair value		296,563	261,165
Liabilities:
Derivatives		339	3,941
Total liabilities at fair value		$ 339	$ 3,941

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets Measured on Recurring Basis) (Details) - Level 3 $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 261,165
Total gains or losses (realized or unrealized):
Included in earnings	22,579
Purchases/Originations	173,428
Sales	(155,430)
Paydowns	(39,058)
Issuances	0
Settlements	(49,759)
Capitalized Interest	12,742
Included in OCI	(25,428)
Deconsolidation of VIEs	94,526
Transfers into Level 3	1,798
Ending balance	296,563
CMBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	159,424
Total gains or losses (realized or unrealized):
Included in earnings	(324)
Purchases/Originations	5,138
Sales	0
Paydowns	(25,554)
Issuances	0
Settlements	0
Capitalized Interest	0
Included in OCI	(1,146)
Deconsolidation of VIEs	(55,776)
Transfers into Level 3	0
Ending balance	81,762
ABS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	44,213
Total gains or losses (realized or unrealized):
Included in earnings	606
Purchases/Originations	44,819
Sales	(57,639)
Paydowns	(10,853)
Issuances	0
Settlements	(28,425)
Capitalized Interest	12,552
Included in OCI	(24,282)
Deconsolidation of VIEs	172,154
Transfers into Level 3	0
Ending balance	153,145
Structured Finance Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	25,550
Total gains or losses (realized or unrealized):
Included in earnings	86
Purchases/Originations	0
Sales	0
Paydowns	(227)
Issuances	0
Settlements	0
Capitalized Interest	190
Included in OCI	0
Deconsolidation of VIEs	(21,852)
Transfers into Level 3	0
Ending balance	3,747
Loans Held for Sale
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	29,358
Total gains or losses (realized or unrealized):
Included in earnings	(390)
Purchases/Originations	123,471
Sales	(97,791)
Paydowns	(2,424)
Issuances	0
Settlements	0
Capitalized Interest	0
Included in OCI	0
Deconsolidation of VIEs	0
Transfers into Level 3
Ending balance	52,224
Structured notes
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	1,051
Total gains or losses (realized or unrealized):
Included in earnings	(198)
Purchases/Originations	0
Sales	0
Paydowns	0
Issuances	0
Settlements	(853)
Capitalized Interest	0
Included in OCI	0
Deconsolidation of VIEs	0
Transfers into Level 3	0
Ending balance	0
Interest Rate Lock Commitments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	1,224
Total gains or losses (realized or unrealized):
Included in earnings	22,654
Purchases/Originations	0
Sales	0
Paydowns	0
Issuances	0
Settlements	(20,201)
Capitalized Interest	0
Included in OCI	0
Deconsolidation of VIEs	0
Transfers into Level 3	0
Ending balance	3,677
Forwards - Residential Mortgage Loans
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	345
Total gains or losses (realized or unrealized):
Included in earnings	145
Purchases/Originations	0
Sales	0
Paydowns	0
Issuances	0
Settlements	(280)
Capitalized Interest	0
Included in OCI	0
Deconsolidation of VIEs	0
Transfers into Level 3	0
Ending balance	210
RMBS - Term Repurchase Facility
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	0
Total gains or losses (realized or unrealized):
Included in earnings	0
Purchases/Originations	0
Sales	0
Paydowns	0
Issuances	0
Settlements	0
Capitalized Interest	0
Included in OCI	0
Deconsolidation of VIEs	0
Transfers into Level 3	1,798
Ending balance	$ 1,798

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Liabilities Measured on Recurring Basis Level 3 Inputs) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Interest Rate Swaps
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, January 1, 2016	$ 3,459
Included in earnings	50
Settlements	0
Unrealized gains - included in accumulated other comprehensive income	(3,509)
Balance, September 30, 2016	0
Level 3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, January 1, 2016	3,941
Included in earnings	342
Settlements	(435)
Unrealized gains - included in accumulated other comprehensive income	(3,509)
Balance, September 30, 2016	339
Level 3 | Interest Rate Lock Commitments
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, January 1, 2016	3
Included in earnings	43
Settlements	(42)
Unrealized gains - included in accumulated other comprehensive income	0
Balance, September 30, 2016	4
Level 3 | Forwards - Residential Mortgage Loans
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, January 1, 2016	479
Included in earnings	249
Settlements	(393)
Unrealized gains - included in accumulated other comprehensive income	0
Balance, September 30, 2016	$ 335

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets and Liabilities, Quantitative Information) (Details) - Nonrecurring - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Loans held for sale	$ 7,182	$ 1,432
Impaired loans	30,074	129,695
Mortgage servicing rights	25,284
Total assets at fair value	62,540	131,127
Level 1
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Loans held for sale	0	0
Impaired loans	0	0
Mortgage servicing rights	0
Total assets at fair value	0	0
Level 2
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Loans held for sale	2,557	1,279
Impaired loans	0	262
Mortgage servicing rights	0
Total assets at fair value	2,557	1,541
Level 3
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Loans held for sale	4,625	153
Impaired loans	30,074	129,433
Mortgage servicing rights	25,284
Total assets at fair value	$ 59,983	$ 129,586

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value, by Balance Sheet Grouping) (Details) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held-for-investment	[1]	$ 1,406,581	$ 2,160,751
Senior secured revolving credit agreement		1,401,842	1,895,288
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held-for-investment		1,406,581	2,160,751
CDO notes		528,971	1,032,581
Junior subordinated notes		49,586	51,413
Convertible notes		207,588	205,484
Repurchase agreements		613,127	418,836
Senior secured revolving credit agreement		0	186,974
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held-for-investment		1,410,911	2,150,061
CDO notes		524,864	923,817
Junior subordinated notes		25,372	17,907
Convertible notes		215,000	205,484
Repurchase agreements		616,575	418,836
Senior secured revolving credit agreement		0	186,974
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held-for-investment		0	0
CDO notes		0	0
Junior subordinated notes		0	0
Convertible notes		0	0
Repurchase agreements		0	0
Senior secured revolving credit agreement		0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held-for-investment		50,933	222,100
CDO notes		0	0
Junior subordinated notes		0	0
Convertible notes		0	0
Repurchase agreements		0	0
Senior secured revolving credit agreement		0	0
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held-for-investment		1,359,978	1,927,961
CDO notes		524,864	923,817
Junior subordinated notes		25,372	17,907
Convertible notes		215,000	205,484
Repurchase agreements		616,575	418,836
Senior secured revolving credit agreement		$ 0	$ 186,974

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

MARKET RISK AND DERIVATIVE INSTRUMENTS (Details)	Sep. 30, 2016 USD ($)	Jan. 01, 2016 USD ($) Derivative	Dec. 31, 2015 USD ($) Derivative
Derivatives, Fair Value [Line Items]
Fair value	$ 2,158,000		$ 3,941,000
Interest Rate Swaps
Derivatives, Fair Value [Line Items]
Number of derivative instruments held | Derivative			9
Average fixed interest rate (in hundredths)			5.38%
Notional amount			$ 102,800,000
Fair value	0		3,500,000
Unrealized losses on non-designated derivative instruments	$ 41,000		$ 3,500,000
RREF CDO 2006-1, CDO 2007-1 Senior Notes | Interest Rate Swaps
Derivatives, Fair Value [Line Items]
Number of derivative instruments held | Derivative		6
Notional amount		$ 99,900,000

XML

MARKET RISK AND DERIVATIVE INSTRUMENTS (Fair Value and Classification of Derivatives) (Details) $ in Thousands, € in Millions	9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 EUR (€)	Dec. 31, 2015 USD ($)	Dec. 31, 2015 EUR (€)
Derivatives, Fair Value [Line Items]
Fair Value	$ 4,052			$ 3,446
Fair Value	2,158			3,941
Interest Rate Lock Commitments
Derivatives, Fair Value [Line Items]
Notional Amount	260,970			105,385
Notional Amount	2,636			505
Interest Rate Lock Commitments | Gain (loss) on sale of residential mortgage loans
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)	2,452	$ 1,128
Interest Rate Lock Commitments | Derivatives, at fair value
Derivatives, Fair Value [Line Items]
Fair Value	3,677			1,224
Fair Value	4			3
Interest Rate Swaps
Derivatives, Fair Value [Line Items]
Notional Amount				102,799
Interest Rate Swaps | Interest expense
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)	(95)	4,923
Interest Rate Swaps | Gain (loss) on sale of residential mortgage loans
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)		(34)
Interest Rate Swaps | Derivatives, at fair value
Derivatives, Fair Value [Line Items]
Fair Value				3,459
Interest Rate Swaps | Accumulated Other Comprehensive (Loss) Income
Derivatives, Fair Value [Line Items]
Notional Amount	0
Fair Value	41			(3,471)
RMBS | Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)		(122)
Forward Contracts
Derivatives, Fair Value [Line Items]
Notional Amount	79,838			92,413
Notional Amount	352,342			143,553
Forward Contracts | Gain (loss) on sale of residential mortgage loans
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)	(1,577)	(197)
Forward Contracts | Derivatives, at fair value
Derivatives, Fair Value [Line Items]
Fair Value	237			345
Fair Value	1,897			479
Warrant
Derivatives, Fair Value [Line Items]
Notional Amount				553
Warrant | Derivatives, at fair value
Derivatives, Fair Value [Line Items]
Fair Value				1,051
Forward contracts-foreign currency
Derivatives, Fair Value [Line Items]
Notional Amount	16,993		€ 15.1	24,850	€ 22.9
Notional Amount	8,848		€ 7.9
Forward contracts-foreign currency | Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)	(733)	2,254
Forward contracts-foreign currency | Derivatives, at fair value
Derivatives, Fair Value [Line Items]
Fair Value	137			727
Fair Value	104
US Treasury Securities | Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)		184
Forward contracts - TBA securities
Derivatives, Fair Value [Line Items]
Notional Amount	1,000			29,500
Notional Amount	43,000			1,500
Forward contracts - TBA securities | Gain (loss) on sale of residential mortgage loans
Derivatives, Fair Value [Line Items]
Realized and Unrealized Gain (Loss)	(1,070)	$ 415
Forward contracts - TBA securities | Derivatives, at fair value
Derivatives, Fair Value [Line Items]
Fair Value	1			99
Fair Value	$ 153			$ 0

XML

OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Offsetting Derivative Assets [Abstract]
Fair Value	$ 4,052	$ 3,446
Derivative Asset, Fair Value, Gross Liability	0	0
Derivative Asset, Fair Value, Amount Not Offset Against Collateral	4,052	3,446
Derivative, Collateral, Obligation to Return Securities	0	0
Derivative, Collateral, Obligation to Return Cash	0	0
Derivative Asset, Fair Value, Offset Against Collateral, Net of Not Subject to Master Netting Arrangement, Policy Election	4,052	3,446
Total-Assets
Gross Amounts of Recognized Assets	4,052	3,446
Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Net Amounts of Assets Included in the Consolidated Balance Sheets-Total	4,052	3,446
Gross Amounts Not Offset in the Consolidated Balance Sheets- Financial Instruments	0	0
Gross Amounts Not Offset in the Consolidated Balance Sheets- Cash Collateral Pledged	0	0
Net Amount	4,052	3,446
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	2,158	3,941
Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Net Amounts of Liabilities Included in the Consolidated Balance Sheets	2,158	3,941
Gross Amounts Not Offset in the Consolidated Balance Sheets- Financial Instruments	0	0
Gross Amounts Not Offset in the Consolidated Balance Sheets- Cash Collateral Pledged	0	500
Net Amount	2,158	3,441
Repurchase agreements and term facilties
Gross Amounts of Recognized Liabilities	613,734	418,836
Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Net Amounts of Liabilities Included in the Consolidated Balance Sheets	613,734	418,836
Gross Amounts Not Offset in the Consolidated Balance Sheets- Financial Instruments	613,734	418,836
Gross Amounts Not Offset in the Consolidated Balance Sheets- Cash Collateral Pledged	0	0
Net Amount	0	0
Total-Liabilities
Gross Amounts Offset in the Consolidated Balance Sheets	615,892	422,777
Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Net Amounts of Liabilities Included in the Consolidated Balance Sheets	615,892	422,777
Gross Amounts Not Offset in the Consolidated Balance Sheets- Financial Instruments	613,734	418,836
Gross Amounts Not Offset in the Consolidated Balance Sheets- Cash Collateral Pledged	0	500
Net Amount	2,158	3,441
Fair value of securities pledged against swaps		500
Fair value of securities pledged against repurchase agreements	$ 942,300	$ 643,200

XML

COMMITMENTS AND CONTINGENCIES (Details) $ in Millions			1 Months Ended	9 Months Ended
	Feb. 03, 2016 Loan plantiff	May 13, 2014 Defendant	Oct. 31, 2016 USD ($) plantiff	Sep. 30, 2016 USD ($) plantiff	Dec. 31, 2015 USD ($)
Loss Contingencies [Line Items]
Estimated litigation liability				$ 5.2	$ 3.7
PCM
Loss Contingencies [Line Items]
Loss Contingency, Number of Defendants | Defendant		90
Loss contingency, estimate of possible loss				$ 20.5
Loss contingency, number of plaintiffs | plantiff	145			4
Estimated litigation liability				$ 2.1
Commercial Real Estate Portfolio Segment
Loss Contingencies [Line Items]
Financing receivable, category of loans | Loan	2
Subsequent Event
Loss Contingencies [Line Items]
Loss contingency, claims settled | plantiff			2
Loss contingency, loss in period			$ 10.0

XML

SEGMENT REPORTING (Details) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | Loan				5
Interest income		$ 31,352	$ 38,323	$ 107,198	$ 110,210
Interest expense		14,120	16,330	46,581	45,334
Net interest income		17,232	21,993	60,617	64,876
Gain on sale of mortgages		6,026	3,154	15,607	11,594
Amortization of MSRs		(331)	(518)	(1,100)	(1,500)
Interest income - other		769	968	4,317	2,919
Total revenues		25,093	25,945	77,496	81,287
Segment operating expenses		50,646	14,879	94,757	87,241
General and administrative		12,341	10,223	33,353	29,641
Depreciation and amortization		505	628	1,650	1,814
Impairment losses		25,297	0	25,297	59
Provision (recovery) for loan and lease losses		7,683	1,034	19,819	43,834
Equity in net (earnings) losses of unconsolidated subsidiaries		(1,032)	(334)	(5,950)	(1,702)
Other (income) expense		(1,500)	0	(1,500)	0
INCOME (LOSS) BEFORE TAXES		(33,338)	12,926	(17,514)	12,946
Income tax (expense) benefit		(12,283)	1,796	(9,558)	(2,969)
NET INCOME (LOSS)		(45,621)	14,722	(27,072)	9,977
Total Assets	[1]	2,157,478		2,157,478		$ 2,760,432
Commercial Real Estate Lending
Segment Reporting Information [Line Items]
Interest income		25,365	25,658	75,630	70,319
Other		6	12	30	82
Interest expense		8,573	9,004	25,160	23,933
Net interest income		16,792	16,654	50,470	46,386
Gain on sale of mortgages		0	0	0	0
Amortization of MSRs		0	0	0	0
Interest income - other		0	0	0	0
Total revenues		16,792	16,654	50,470	46,386
Segment operating expenses		99	50	233	56
General and administrative		424	633	1,681	1,382
Depreciation and amortization		0	0	0	0
Impairment losses		21,385		21,385	0
Provision (recovery) for loan and lease losses		7,997	(46)	7,997	38,025
Equity in net (earnings) losses of unconsolidated subsidiaries		(132)	0	(585)	(46)
Other (income) expense		(32)	6,352	(875)	7,200
INCOME (LOSS) BEFORE TAXES		(12,949)	9,665	20,634	(231)
Income tax (expense) benefit		0	0	0	(39)
NET INCOME (LOSS)		(12,949)	9,665	20,634	(270)
Total Assets		1,685,295		1,685,295		1,907,951
Commercial Finance
Segment Reporting Information [Line Items]
Interest income		1,357	4,144	6,220	17,106
Other		724	803	4,221	2,607
Interest expense		0	368	0	2,225
Net interest income		1,357	3,776	6,220	14,881
Gain on sale of mortgages		0	0	0	0
Amortization of MSRs		0	0	0	0
Interest income - other		828	1,033	2,162	3,398
Total revenues		2,185	4,809	8,382	18,279
Segment operating expenses		109	272	679	940
General and administrative		149	569	847	2,238
Depreciation and amortization		331	454	1,132	1,346
Impairment losses		3,671		3,671	59
Provision (recovery) for loan and lease losses		(435)	179	(358)	1,696
Equity in net (earnings) losses of unconsolidated subsidiaries		(900)	(333)	(5,365)	(1,655)
Other (income) expense		29	(8,162)	(947)	(16,856)
INCOME (LOSS) BEFORE TAXES		(769)	11,830	8,723	30,511
Income tax (expense) benefit		(1,236)	(286)	(973)	(1,782)
NET INCOME (LOSS)		(2,005)	11,544	7,750	28,729
Total Assets		129,441		129,441		298,028
Middle Market Lending
Segment Reporting Information [Line Items]
Interest income		4,267	8,256	24,663	22,093
Other		27	2	43	4
Interest expense		467	1,480	6,181	3,682
Net interest income		3,800	6,776	18,482	18,411
Gain on sale of mortgages		0	0	0	0
Amortization of MSRs		0	0	0	0
Interest income - other		0	0	0	0
Total revenues		3,800	6,776	18,482	18,411
Segment operating expenses		479	1,240	2,990	2,444
General and administrative		1,216	978	3,229	2,262
Depreciation and amortization		0	0	4	1
Impairment losses		0		0	0
Provision (recovery) for loan and lease losses		121	901	12,180	4,223
Equity in net (earnings) losses of unconsolidated subsidiaries		0	0	0	0
Other (income) expense		9,631	147	9,828	39
INCOME (LOSS) BEFORE TAXES		(7,647)	3,510	(9,749)	9,442
Income tax (expense) benefit		0	0	0	0
NET INCOME (LOSS)		(7,647)	3,510	(9,749)	9,442
Total Assets		60,935		60,935		384,973
Residential Mortgage Lending
Segment Reporting Information [Line Items]
Interest income		131	258	329	611
Other		0	144	0	145
Interest expense		0	433	0	721
Net interest income		131	(175)	329	(110)
Gain on sale of mortgages		6,026	3,154	15,607	11,594
Amortization of MSRs		(1,491)	(1,307)	(3,753)	(3,138)
Interest income - other		2,480	1,055	2,809	4,506
Total revenues		7,146	2,727	14,992	12,852
Segment operating expenses		445	71	1,354	1,615
General and administrative		8,073	6,317	21,262	18,009
Depreciation and amortization		142	142	413	372
Impairment losses		241		241	0
Provision (recovery) for loan and lease losses		0	0	0	(110)
Equity in net (earnings) losses of unconsolidated subsidiaries		0	0	0	0
Other (income) expense		(18)	935	(45)	(4,618)
INCOME (LOSS) BEFORE TAXES		(1,737)	(4,738)	(8,233)	(2,416)
Income tax (expense) benefit		(11,047)	2,161	(8,455)	(821)
NET INCOME (LOSS)		(12,784)	(2,577)	(16,688)	(3,237)
Total Assets		256,491		256,491		149,351
Corporate and Other
Segment Reporting Information [Line Items]
Interest income		232	7	356	81
Other		12	7	23	81
Interest expense		5,080	5,045	15,240	14,773
Net interest income		(4,848)	(5,038)	(14,884)	(14,692)
Gain on sale of mortgages		0	0	0	0
Amortization of MSRs		0	0	0	0
Interest income - other		18	17	54	51
Total revenues		(4,830)	(5,021)	(14,830)	(14,641)
Segment operating expenses		3,688	1,361	9,382	6,838
General and administrative		2,479	1,726	6,334	5,750
Depreciation and amortization		32	32	101	95
Impairment losses		0		0	0
Provision (recovery) for loan and lease losses		0	0	0	0
Equity in net (earnings) losses of unconsolidated subsidiaries		0	(1)	0	(1)
Other (income) expense		(793)	(798)	(1,758)	(2,963)
INCOME (LOSS) BEFORE TAXES		(10,236)	(7,341)	(28,889)	(24,360)
Income tax (expense) benefit		0	(79)	(130)	(327)
NET INCOME (LOSS)		(10,236)	(7,420)	(29,019)	(24,687)
Total Assets		25,316		25,316		$ 20,129
Total
Segment Reporting Information [Line Items]
Interest income		31,352	38,323	107,198	110,210
Other		769	968	4,317	2,919
Interest expense		14,120	16,330	46,581	45,334
Net interest income		17,232	21,993	60,617	64,876
Gain on sale of mortgages		6,026	3,154	15,607	11,594
Amortization of MSRs		(1,491)	(1,307)	(3,753)	(3,138)
Interest income - other		3,326	2,105	5,025	7,955
Total revenues		25,093	25,945	77,496	81,287
Segment operating expenses		4,820	2,994	14,638	11,893
General and administrative		12,341	10,223	33,353	29,641
Depreciation and amortization		505	628	1,650	1,814
Provision (recovery) for loan and lease losses		7,683	1,034	19,819	43,834
Equity in net (earnings) losses of unconsolidated subsidiaries		(1,032)	(334)	(5,950)	(1,702)
Other (income) expense		8,817	(1,526)	6,203	(17,198)
INCOME (LOSS) BEFORE TAXES		(33,338)	12,926	(17,514)	12,946
Income tax (expense) benefit		(12,283)	1,796	(9,558)	(2,969)
NET INCOME (LOSS)		(45,621)	14,722	(27,072)	9,977
Total interest income | Commercial Real Estate Lending
Segment Reporting Information [Line Items]
Interest income		25,359	25,646	75,600	70,237
Total interest income | Commercial Finance
Segment Reporting Information [Line Items]
Interest income		633	3,341	1,999	14,499
Total interest income | Middle Market Lending
Segment Reporting Information [Line Items]
Interest income		4,240	8,254	24,620	22,089
Total interest income | Residential Mortgage Lending
Segment Reporting Information [Line Items]
Interest income		131	114	329	466
Total interest income | Corporate and Other
Segment Reporting Information [Line Items]
Interest income		220	0	333	0
Total interest income | Total
Segment Reporting Information [Line Items]
Interest income		30,583	37,355	102,881	107,291
Convertible Debt
Segment Reporting Information [Line Items]
Interest expense		$ 4,400	$ 4,400	$ 13,300	$ 13,000

[1] September 30, 2016December 31, 2015Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: Cash and cash equivalents$— $95 Restricted cash5,473 39,061 Investment securities available-for-sale, pledged as collateral, at fair value— 66,137 Loans held for sale— 1,475Loans, pledged as collateral and net of allowances of $827,000 and $42.8 million801,742 1,416,441 Interest receivable3,389 6,592 Prepaid expenses21 238 Principal paydown receivable44,600 17,800 Other assets253 833 Total assets of consolidated VIEs$855,478 $1,548,672

XML

SEGMENT REPORTING Footnotes (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) Entity	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Entity	Sep. 30, 2015 USD ($)	Jan. 01, 2016 Entity	Dec. 31, 2015 Entity
Debt Instrument [Line Items]
Impairment of Real Estate	$ (25,297)	$ 0	$ (25,297)	$ (59)
Interest expense	14,120	16,330	46,581	45,334
Convertible Debt
Debt Instrument [Line Items]
Interest expense	4,400	4,400	13,300	13,000
Unsecured Junior Subordinated Debentures
Debt Instrument [Line Items]
Interest expense	636	610	1,900	1,800
Commercial Real Estate Lending
Debt Instrument [Line Items]
Impairment of Real Estate	(21,385)		(21,385)	0
Interest expense	8,573	9,004	25,160	23,933
Commercial Finance
Debt Instrument [Line Items]
Impairment of Real Estate	(3,671)		(3,671)	(59)
Interest expense	$ 0	$ 368	$ 0	$ 2,225
VIE, Primary Beneficiary
Debt Instrument [Line Items]
Number of consolidated VIEs | Entity	7		7		5	13
VIE, Primary Beneficiary | Commercial Real Estate Lending
Debt Instrument [Line Items]
Number of consolidated VIEs | Entity					2
VIE, Primary Beneficiary | Commercial Finance
Debt Instrument [Line Items]
Number of consolidated VIEs | Entity					3