þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 72-0654145 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
One Crescent Drive, Suite 203, Navy Yard Corporate Center, Philadelphia, PA 19112 | ||
(Address of principal executive offices) (Zip code) | ||
(215) 546-5005 | ||
(Registrant's telephone number, including area code) | ||
Securities registered pursuant to Section 12(g) of the Act: | ||
Common stock, par value $.01 per share | NASDAQ Global Select Market | |
Title of class | Name of exchange on which registered |
Large accelerated filer | o | Accelerated filer | þ | |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page | ||
PART I | ||
Item 1: | Financial Statements | |
Item 2: | ||
Item 3: | ||
Item 4: | ||
PART II | ||
Item 2: | ||
Item 6: | ||
December 31, 2012 | September 30, 2012 | ||||||
ASSETS | (unaudited) | ||||||
Cash | $ | 11,899 | $ | 19,393 | |||
Restricted cash | 638 | 642 | |||||
Receivables | 468 | 3,554 | |||||
Receivables from managed entities and related parties, net | 38,685 | 41,051 | |||||
Investments in real estate, net | 18,041 | 19,149 | |||||
Investment securities, at fair value | 25,533 | 22,532 | |||||
Investments in unconsolidated loan manager | 37,221 | 36,356 | |||||
Investments in unconsolidated entities | 13,156 | 12,993 | |||||
Property and equipment, net | 2,590 | 2,732 | |||||
Deferred tax assets, net | 35,373 | 34,565 | |||||
Other assets | 6,726 | 3,776 | |||||
Total assets | $ | 190,330 | $ | 196,743 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Accrued expenses and other liabilities | $ | 21,556 | $ | 23,042 | |||
Payables to managed entities and related parties | 3,567 | 4,380 | |||||
Borrowings | 22,610 | 23,020 | |||||
Total liabilities | 47,733 | 50,442 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none outstanding | — | — | |||||
Common stock, $.01 par value, 49,000,000 shares authorized; 30,069,822 and 29,866,664 shares issued (including nonvested restricted stock of 604,353 and 403,195), respectively | 295 | 294 | |||||
Additional paid-in capital | 286,048 | 285,844 | |||||
Accumulated deficit | (27,137 | ) | (24,508 | ) | |||
Treasury stock, at cost; 9,914,090 and 9,756,955 shares, respectively | (103,472 | ) | (102,457 | ) | |||
Accumulated other comprehensive loss | (13,416 | ) | (13,080 | ) | |||
Total stockholders’ equity | 142,318 | 146,093 | |||||
Noncontrolling interests | 279 | 208 | |||||
Total equity | 142,597 | 146,301 | |||||
$ | 190,330 | $ | 196,743 |
Three Months Ended | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
REVENUES: | |||||||
Real estate | $ | 13,154 | $ | 8,666 | |||
Financial fund management | 2,675 | 6,579 | |||||
Commercial finance | (124 | ) | 3,419 | ||||
15,705 | 18,664 | ||||||
COSTS AND EXPENSES: | |||||||
Real estate | 7,998 | 7,192 | |||||
Financial fund management | 1,017 | 5,804 | |||||
Commercial finance | (49 | ) | 1,963 | ||||
General and administrative | 2,256 | 2,896 | |||||
Gain on sale of leases and loans | — | (37 | ) | ||||
Provision for credit losses | 5,152 | 2,250 | |||||
Depreciation and amortization | 492 | 2,061 | |||||
16,866 | 22,129 | ||||||
OPERATING LOSS | (1,161 | ) | (3,465 | ) | |||
OTHER INCOME (EXPENSE): | |||||||
Gain on deconsolidation and sale of subsidiaries | — | 8,749 | |||||
Loss on extinguishment of debt | — | (2,190 | ) | ||||
Gain on sale of investment securities, net | — | 58 | |||||
Interest expense | (522 | ) | (2,974 | ) | |||
Other income, net | 588 | 559 | |||||
66 | 4,202 | ||||||
(Loss) income from continuing operations before taxes | (1,095 | ) | 737 | ||||
Income tax (benefit) provision | (241 | ) | 154 | ||||
(Loss) income from continuing operations | (854 | ) | 583 | ||||
Loss from discontinued operations, net of tax | (6 | ) | (20 | ) | |||
Net (loss) income | (860 | ) | 563 | ||||
Net income attributable to noncontrolling interests | (587 | ) | (378 | ) | |||
Net (loss) income attributable to common shareholders | $ | (1,447 | ) | $ | 185 | ||
Amounts attributable to common shareholders: | |||||||
(Loss) income from continuing operations | $ | (1,441 | ) | $ | 205 | ||
Discontinued operations | (6 | ) | (20 | ) | |||
Net (loss) income | $ | (1,447 | ) | $ | 185 | ||
Basic (loss) earnings per share: | |||||||
Continuing operations | $ | (0.07 | ) | $ | 0.01 | ||
Discontinued operations | — | — | |||||
Net (loss) income | $ | (0.07 | ) | $ | 0.01 | ||
Weighted average shares outstanding | 20,077 | 19,641 | |||||
Diluted (loss) earnings per share: | |||||||
Continuing operations | $ | (0.07 | ) | $ | 0.01 | ||
Discontinued operations | — | — | |||||
Net (loss) income | $ | (0.07 | ) | $ | 0.01 | ||
Weighted average shares outstanding | 20,077 | 20,039 |
Three Months Ended | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
Net (loss) income | $ | (860 | ) | $ | 563 | ||
Other comprehensive (loss) income: | |||||||
Unrealized (loss) gain on investment securities available-for-sale, net of tax of $(328) and $616 | (406 | ) | 985 | ||||
Less: reclassification for losses realized, net of tax of $0 and $0 | — | — | |||||
(406 | ) | 985 | |||||
Minimum pension liability - reclassification for losses realized, net of tax of $37 and $36 | 62 | 47 | |||||
Unrealized gain (loss) on hedging contracts, net of tax of $6 and $(74) | 8 | (129 | ) | ||||
Deconsolidation of LEAF- unrealized loss on hedging contracts net of tax of $0 and $174 | — | 255 | |||||
8 | 126 | ||||||
Comprehensive (loss) income | (1,196 | ) | 1,721 | ||||
Comprehensive income attributable to noncontrolling interests | (587 | ) | (427 | ) | |||
Comprehensive (loss) income attributable to common shareholders | $ | (1,783 | ) | $ | 1,294 |
Attributable to Common Shareholders | ||||||||||||||||||||||||||||||||||
Common Stock Shares | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||
Balance, October 1, 2012 | 20,109,709 | $ | 294 | $ | 285,844 | $ | (24,508 | ) | $ | (102,457 | ) | $ | (13,080 | ) | $ | 146,093 | $ | 208 | $ | 146,301 | ||||||||||||||
Net loss | — | — | — | (1,447 | ) | — | — | (1,447 | ) | 587 | (860 | ) | ||||||||||||||||||||||
Issuance of common shares | — | 1 | — | — | — | — | 1 | — | 1 | |||||||||||||||||||||||||
Treasury shares issued | 6,872 | — | (26 | ) | — | 72 | — | 46 | — | 46 | ||||||||||||||||||||||||
Stock-based compensation | 203,158 | — | 230 | — | — | — | 230 | — | 230 | |||||||||||||||||||||||||
Repurchases of common stock | (164,007 | ) | — | — | — | (1,087 | ) | — | (1,087 | ) | — | (1,087 | ) | |||||||||||||||||||||
Cash dividends | — | — | — | (1,182 | ) | — | — | (1,182 | ) | — | (1,182 | ) | ||||||||||||||||||||||
Distributions | — | — | — | — | — | — | — | (516 | ) | (516 | ) | |||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | (336 | ) | (336 | ) | — | (336 | ) | ||||||||||||||||||||||
Balance, December 31, 2012 | 20,155,732 | $ | 295 | $ | 286,048 | $ | (27,137 | ) | $ | (103,472 | ) | $ | (13,416 | ) | $ | 142,318 | $ | 279 | $ | 142,597 |
Three Months Ended | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net (loss) income | $ | (860 | ) | $ | 563 | ||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||||||
Depreciation and amortization | 550 | 3,087 | |||||
Provision for credit losses | 5,152 | 2,250 | |||||
Unrealized gain on trading securities | (164 | ) | — | ||||
Equity in earnings of unconsolidated entities | (1,201 | ) | (557 | ) | |||
Distributions from unconsolidated entities | 1,011 | 1,163 | |||||
Gain on sale of leases and loans | — | (37 | ) | ||||
Gain on sale of investment securities, net | (307 | ) | (58 | ) | |||
Gain on sale of assets | (831 | ) | — | ||||
Gain on sale and deconsolidation of subsidiaries | — | (8,749 | ) | ||||
Loss on extinguishment of debt | — | 2,190 | |||||
Deferred income tax (benefit) provision | (241 | ) | 154 | ||||
Equity-based compensation issued | 205 | 498 | |||||
Equity-based compensation received | (206 | ) | — | ||||
Trading securities purchases and sales, net | (1,828 | ) | — | ||||
Loss from discontinued operations | 6 | 20 | |||||
Changes in operating assets and liabilities | (4,666 | ) | (1,432 | ) | |||
Net cash used in operating activities | (3,380 | ) | (908 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Capital expenditures | (80 | ) | (106 | ) | |||
Payments received on real estate loans and real estate | 712 | 1,550 | |||||
Investments in real estate and unconsolidated real estate entities | (1,012 | ) | (127 | ) | |||
Purchase of commercial finance assets | — | (18,483 | ) | ||||
Principal payments received on leases and loans | 3 | 9,031 | |||||
Cash divested on deconsolidation of LEAF | — | (2,284 | ) | ||||
Purchase of investments | (1,323 | ) | (600 | ) | |||
Proceeds from sale of loans and investments | — | 207 | |||||
Net cash used in investing activities | (1,700 | ) | (10,812 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Increase in borrowings | — | 128,845 | |||||
Principal payments on borrowings | (229 | ) | (123,823 | ) | |||
Dividends paid | (593 | ) | (569 | ) | |||
Repurchase of common stock | (1,078 | ) | (939 | ) | |||
Preferred stock dividends paid by LEAF to RSO | — | (188 | ) | ||||
Decrease (increase) in restricted cash | 3 | (633 | ) | ||||
Other | (150 | ) | (2,250 | ) | |||
Net cash (used in) provided by financing activities | (2,047 | ) | 443 | ||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | |||||||
Operating activities | (367 | ) | (375 | ) | |||
Net cash used in discontinued operations | (367 | ) | (375 | ) | |||
Decrease in cash | (7,494 | ) | (11,652 | ) | |||
Cash, beginning of year | 19,393 | 24,455 | |||||
Cash, end of period | $ | 11,899 | $ | 12,803 |
Three Months Ended | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
Cash (paid) received: | |||||||
Interest | $ | (467 | ) | $ | (2,077 | ) | |
Income tax payments | (61 | ) | (118 | ) | |||
Refunds of income taxes | 71 | 97 | |||||
Dividends declared per common share | $ | 0.03 | $ | 0.03 | |||
Non-cash activities: | |||||||
Repurchases of common stock from employees in exchange for the payment of income taxes and option exercises | $ | 9 | $ | 8 | |||
Issuance of treasury stock for the Company's investment savings plan | 72 | 126 | |||||
Effects from the deconsolidation of entities:(1) | |||||||
Restricted cash | $ | — | $ | 20,282 | |||
Receivables from managed entities and related parties, net | — | (3,411 | ) | ||||
Receivables | — | 954 | |||||
Investments in commercial finance, net | — | 199,955 | |||||
Investments in unconsolidated entities | — | 7,049 | |||||
Property and equipment, net | — | 3,754 | |||||
Deferred tax assets, net | — | 4,558 | |||||
Goodwill | 7,969 | ||||||
Other assets | — | 6,806 | |||||
Accrued expense and other liabilities | — | (10,208 | ) | ||||
Payables to managed entities and related parties | — | (98 | ) | ||||
Borrowings | — | (202,481 | ) | ||||
Accumulated other comprehensive loss | — | 255 | |||||
Noncontrolling interests | — | (37,668 | ) |
(1) | Reflects the deconsolidation of LEAF Commercial Capital, Inc. ("LEAF") during the three months ended December 31, 2011. As a result of the deconsolidation of this entity, the amounts noted above were removed from the Company’s consolidated balance sheets. The sum of the assets removed and cash equated to the sum of the liabilities and equity that were similarly eliminated and, as such, there was no change in the Company’s total net assets. |
30-89 Days Past Due | Greater than 90 Days | Greater than 181 Days | Total Past Due | Current | Total | ||||||||||||||||||
Receivables from managed entities and related parties: (1) | |||||||||||||||||||||||
Commercial finance investment entities | $ | — | $ | — | $ | 40,112 | $ | 40,112 | $ | 118 | $ | 40,230 | |||||||||||
Real estate investment entities | 816 | 744 | 17,062 | 18,622 | 2,002 | 20,624 | |||||||||||||||||
Financial fund management entities | 6 | — | 47 | 53 | 2,140 | 2,193 | |||||||||||||||||
RSO | — | — | — | — | 8,020 | 8,020 | |||||||||||||||||
Other | 41 | — | — | 41 | 137 | 178 | |||||||||||||||||
863 | 744 | 57,221 | 58,828 | 12,417 | 71,245 | ||||||||||||||||||
Rent receivables - real estate | 4 | 10 | 58 | 72 | 40 | 112 | |||||||||||||||||
Total financing receivables | $ | 867 | $ | 754 | $ | 57,279 | $ | 58,900 | $ | 12,457 | $ | 71,357 |
(1) | Receivables are presented gross of an allowance for credit losses of $29.6 million, $2.5 million and $457,000 related to the Company’s commercial finance, real estate and financial fund management investment entities, respectively. The remaining receivables from managed entities and related parties have no related allowance for credit losses. |
30-89 Days Past Due | Greater than 90 Days | Greater than 181 Days | Total Past Due | Current | Total | ||||||||||||||||||
Receivables from managed entities and related parties: (1) | |||||||||||||||||||||||
Commercial finance investment entities | $ | — | $ | — | $ | 38,834 | $ | 38,834 | $ | 148 | $ | 38,982 | |||||||||||
Real estate investment entities | 784 | 2,694 | 15,180 | 18,658 | 2,091 | 20,749 | |||||||||||||||||
Financial fund management entities | 6 | — | 46 | 52 | 2,141 | 2,193 | |||||||||||||||||
RSO | — | — | — | — | 6,555 | 6,555 | |||||||||||||||||
Other | — | — | — | — | 152 | 152 | |||||||||||||||||
790 | 2,694 | 54,060 | 57,544 | 11,087 | 68,631 | ||||||||||||||||||
Rent receivables - real estate | 6 | 1 | 32 | 39 | 6 | 45 | |||||||||||||||||
Total financing receivables | $ | 796 | $ | 2,695 | $ | 54,092 | $ | 57,583 | $ | 11,093 | $ | 68,676 |
(1) | Receivables are presented gross of an allowance for credit losses of $25.1 million and $2.5 million related to the Company’s commercial finance and real estate investment entities, respectively. The remaining receivables from managed entities and related parties have no related allowance for credit losses. |
Receivables from Managed Entities | Leases and Loans | Rent Receivables | Total | ||||||||||||
Three Months Ended December 31, 2012: | |||||||||||||||
Balance, beginning of year | $ | 27,580 | $ | — | $ | 33 | $ | 27,613 | |||||||
Provision for credit losses | 5,120 | (3 | ) | 35 | 5,152 | ||||||||||
Charge-offs | (140 | ) | — | (140 | ) | ||||||||||
Recoveries | — | 3 | — | 3 | |||||||||||
Balance, end of period | $ | 32,560 | $ | — | $ | 68 | $ | 32,628 | |||||||
Ending balance, individually evaluated for impairment | $ | 32,560 | $ | — | $ | — | $ | 32,560 | |||||||
Ending balance, collectively evaluated for impairment | — | — | 68 | 68 | |||||||||||
Balance, end of period | $ | 32,560 | $ | — | $ | 68 | $ | 32,628 | |||||||
Three Months Ended December 31, 2011: | |||||||||||||||
Balance, beginning of year | $ | 10,490 | $ | 430 | $ | 15 | $ | 10,935 | |||||||
Provision for credit losses | 2,085 | 151 | 14 | 2,250 | |||||||||||
Charge-offs | — | (124 | ) | — | (124 | ) | |||||||||
Recoveries | — | 25 | — | 25 | |||||||||||
Deconsolidation of LEAF | — | (482 | ) | — | (482 | ) | |||||||||
Balance, end of period | $ | 12,575 | $ | — | $ | 29 | $ | 12,604 | |||||||
Ending balance, individually evaluated for impairment | $ | 12,575 | $ | — | $ | — | $ | 12,575 | |||||||
Ending balance, collectively evaluated for impairment | — | — | 29 | 29 | |||||||||||
Balance, end of period | $ | 12,575 | $ | — | $ | 29 | $ | 12,604 |
Receivables from Managed Entities | Rent Receivables | Total | |||||||||
Ending balance, individually evaluated for impairment | $ | 71,245 | $ | — | $ | 71,245 | |||||
Ending balance, collectively evaluated for impairment | — | 112 | 112 | ||||||||
Balance, end of year | $ | 71,245 | $ | 112 | $ | 71,357 |
Receivables from Managed Entities | Rent Receivables | Total | |||||||||
Ending balance, individually evaluated for impairment | $ | 68,631 | $ | — | $ | 68,631 | |||||
Ending balance, collectively evaluated for impairment | — | 45 | 45 | ||||||||
Balance, end of year | $ | 68,631 | $ | 45 | $ | 68,676 |
Net Balance | Unpaid Balance | Specific Allowance | Average Investment in Impaired Assets | ||||||||||||
As of December 31, 2012 | |||||||||||||||
Financing receivables with a specific valuation allowance: | |||||||||||||||
Receivables from managed entities – commercial finance | $ | 8,633 | $ | 38,219 | $ | 29,586 | $ | 38,110 | |||||||
Receivables from managed entities – real estate | 2,291 | 4,808 | 2,517 | 4,630 | |||||||||||
Receivables from managed entities – financial fund management | 848 | 1,305 | 457 | 1,305 | |||||||||||
Rent receivables – real estate | — | 68 | 68 | 40 | |||||||||||
As of September 30, 2012: | |||||||||||||||
Financing receivables with a specific valuation allowance: | |||||||||||||||
Receivables from managed entities – commercial finance | $ | 12,865 | $ | 37,943 | $ | 25,078 | $ | 38,060 | |||||||
Receivables from managed entities – real estate | 2,181 | 4,683 | 2,502 | 4,511 | |||||||||||
Rent receivables – real estate | 12 | 45 | 33 | 45 |
December 31, 2012 | September 30, 2012 | ||||||
Properties owned, net of accumulated depreciation of $5,781 and $5,592: | |||||||
Hotel property (Savannah, Georgia) | $ | 11,107 | $ | 11,619 | |||
Office building (Philadelphia, Pennsylvania) | 1,058 | 906 | |||||
12,165 | 12,525 | ||||||
Commercial property (Elkins, West Virginia), net of accumulated depreciation of $0 and $784 | — | 727 | |||||
Partnerships and other investments | 5,876 | 5,897 | |||||
Total investments in real estate, net | $ | 18,041 | $ | 19,149 |
2013 | $ | 944 | |
2014 | 872 | ||
2015 | 662 | ||
2016 | 487 | ||
2017 | 396 | ||
Thereafter | 546 | ||
$ | 3,907 |
December 31, 2012 | September 30, 2012 | ||||||
Available-for-sale securities | $ | 20,168 | $ | 19,468 | |||
Trading securities | 5,365 | 3,064 | |||||
Total investment securities, at fair value | $ | 25,533 | $ | 22,532 |
Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
December 31, 2012: | |||||||||||||||
Equity securities | $ | 33,467 | $ | 100 | $ | (18,401 | ) | $ | 15,166 | ||||||
CLO securities | 3,712 | 1,290 | — | 5,002 | |||||||||||
Total | $ | 37,179 | $ | 1,390 | $ | (18,401 | ) | $ | 20,168 | ||||||
September 30, 2012 | |||||||||||||||
Equity securities | $ | 33,260 | $ | 86 | $ | (17,649 | ) | $ | 15,697 | ||||||
CLO securities | 2,484 | 1,302 | (15 | ) | 3,771 | ||||||||||
Total | $ | 35,744 | $ | 1,388 | $ | (17,664 | ) | $ | 19,468 |
Less than 12 Months | More than 12 Months | ||||||||||||||||||||
Fair Value | Unrealized Losses | Number of Securities | Fair Value | Unrealized Losses | Number of Securities | ||||||||||||||||
December 31, 2012: | |||||||||||||||||||||
Equity securities | $ | 193 | $ | (13 | ) | 1 | $ | 12,280 | $ | (18,579 | ) | 1 | |||||||||
CLO securities | — | — | — | — | — | — | |||||||||||||||
Total | $ | 193 | $ | (13 | ) | 1 | $ | 12,280 | $ | (18,579 | ) | 1 | |||||||||
September 30, 2012 | |||||||||||||||||||||
Equity securities | $ | — | $ | — | — | $ | 12,161 | $ | (17,976 | ) | 1 | ||||||||||
CLO securities | 1,274 | (15 | ) | 1 | — | — | — | ||||||||||||||
Total | $ | 1,274 | $ | (15 | ) | 1 | $ | 12,161 | $ | (17,976 | ) | 1 |
Range of Combined Ownership Interests | December 31, 2012 | September 30, 2012 | |||||||
Real estate investment entities | 1% – 10% | $ | 8,397 | $ | 8,043 | ||||
Financial fund management partnerships | 3% − 11% | 3,847 | 3,983 | ||||||
Trapeza entities | 33% − 50% | 912 | 967 | ||||||
Investments in unconsolidated entities | $ | 13,156 | $ | 12,993 |
September 30, 2012 | |||
Cash and property and equipment, net | $ | 727 | |
Accrued expenses and other liabilities | 189 |
Receivables from Managed Entities and Related Parties, Net (1) | Investments | Maximum Exposure to Loss in Non-consolidated VIEs | |||||||||
RSO | $ | 7,685 | $ | 14,958 | $ | 22,643 | |||||
RRE Opportunity REIT | — | 1,792 | 1,792 | ||||||||
Ischus entities | 237 | — | 237 | ||||||||
Trapeza entities | — | 912 | 912 | ||||||||
$ | 7,922 | $ | 17,662 | $ | 25,584 |
(1) | Exclusive of expense reimbursements due to the Company. |
December 31, 2012 | September 30, 2012 | ||||||
Accounts payable and other accrued liabilities | $ | 8,773 | $ | 8,627 | |||
SERP liability (see Note 13) | 6,803 | 6,976 | |||||
Accrued wages and benefits | 4,428 | 5,396 | |||||
Trapeza clawback (see Note 17 ) | 1,181 | 1,181 | |||||
Real estate loan commitment | 371 | 862 | |||||
Total accrued expenses and other liabilities | $ | 21,556 | $ | 23,042 |
As of December 31, 2012 | September 30, 2012 | ||||||||||
Maximum Amount of Facility | Borrowings Outstanding | Borrowings Outstanding | |||||||||
Credit facilities: | |||||||||||
TD Bank – secured revolving credit facility (1) | $ | 6,997 | $ | — | $ | — | |||||
Republic Bank – secured revolving credit facility | 3,366 | — | — | ||||||||
— | — | ||||||||||
Other Debt: | |||||||||||
Senior Notes | 10,000 | 10,000 | |||||||||
Note payable to RSO | 1,570 | 1,677 | |||||||||
Mortgage debt | 10,473 | 10,531 | |||||||||
Other debt | 567 | 812 | |||||||||
Total borrowings | $ | 22,610 | $ | 23,020 |
(1) | The amount of the facility as shown has been reduced for outstanding letters of credit of $503,000 at December 31, 2012 and September 30, 2012. |
2013 | $ | 753 | |
2014 | 198 | ||
2015 | 11,782 | ||
2016 | 224 | ||
2017 | 240 | ||
Thereafter | 9,413 | ||
$ | 22,610 |
Investment Securities Available-for-Sale | Cash Flow Hedges | SERP Pension Liability | Total | ||||||||||||
Balance, September 30, 2012, net of tax of $(6,263), $(15) and $(2,328) | $ | (10,013 | ) | $ | (22 | ) | $ | (3,045 | ) | $ | (13,080 | ) | |||
Changes during fiscal 2013 | (406 | ) | 8 | 62 | (336 | ) | |||||||||
Balance, December 31, 2012, net of tax of $(6,592), $(10), and $(2,290) | $ | (10,419 | ) | $ | (14 | ) | $ | (2,983 | ) | $ | (13,416 | ) |
Three Months Ended | ||
December 31, 2011 | ||
Shares | ||
Basic shares outstanding | 19,641 | |
Dilutive effect of outstanding stock options, warrants and director units | 398 | |
Dilutive shares outstanding | 20,039 |
For the Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Interest cost | $ | 59 | $ | 80 | |||
Less: expected return on plan assets | (23 | ) | (18 | ) | |||
Plus: Amortization of unrecognized loss | 100 | 83 | |||||
Net cost | $ | 136 | $ | 145 |
December 31, 2012 | September 30, 2012 | ||||||
Receivables from managed entities and related parties, net: | |||||||
Commercial finance investment entities (1) | $ | 10,644 | $ | 13,904 | |||
Real estate investment entities (2) | 18,107 | 18,247 | |||||
Financial fund management investment entities | 1,736 | 2,193 | |||||
RSO | 8,020 | 6,555 | |||||
Other | 178 | 152 | |||||
Receivables from managed entities and related parties | $ | 38,685 | $ | 41,051 | |||
Payables due to managed entities and related parties, net: | |||||||
Real estate investment entities (3) | $ | 3,300 | $ | 3,900 | |||
Other | 267 | 480 | |||||
Payables to managed entities and related parties | $ | 3,567 | $ | 4,380 |
(1) | Includes $29.6 million of reserves for credit losses related to management fees owed from three commercial finance investment entities that, based on changes in the estimated cash distributions, are not expected to be collectible. |
(2) | Includes $2.5 million of reserves for credit losses related to management fees owed from two real estate investment entities that, based on projected cash flows, are not expected to be collectible. |
(3) | Includes $3.2 million in funds provided by the real estate investment entities, which are held by the Company to self insure the properties held by those entities. |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Fees from unconsolidated investment entities: | |||||||
Real estate (1) | $ | 4,017 | $ | 3,768 | |||
Financial fund management | 760 | 850 | |||||
Commercial finance (2) | — | — | |||||
RSO: | |||||||
Management, incentive and other fees | 4,849 | 3,830 | |||||
Dividends paid | 534 | 631 | |||||
Reimbursement of costs and expenses | 1,160 | 705 | |||||
CVC Credit Partners – reimbursement of net costs and expenses | 216 | — | |||||
RRE Opportunity REIT: | |||||||
Reimbursement of costs and expenses | 75 | 105 | |||||
LEAF: | |||||||
Payment for sub-servicing the commercial finance investment partnerships | (382 | ) | (405 | ) | |||
Payment for rent and related expenses | (197 | ) | (120 | ) | |||
Reimbursement of net costs and expenses | 59 | 60 | |||||
1845 Walnut Associates Ltd. – payment of rent and operating expenses | (154 | ) | (106 | ) | |||
Brandywine Construction & Management, Inc. – payment for property management of hotel property | (54 | ) | (59 | ) | |||
Atlas Energy, L.P. – reimbursement of net costs and expenses | 144 | 169 | |||||
Ledgewood P.C. – payment for legal services | (53 | ) | (155 | ) | |||
Graphic Images, LLC – payment for printing services | (27 | ) | (8 | ) | |||
The Bancorp, Inc. – reimbursement of net costs and expenses | 28 | 45 | |||||
9 Henmar, LLC – payment of broker/consulting fees | (19 | ) | (18 | ) |
(1) | Includes discounts recorded by the Company of $538,000 and $76,000 recorded in the three months ended December 31, 2012 and 2011 in connection with management fees from its real estate investment entities that it expects to receive in future periods. |
(2) | During the three months ended December 31, 2012 and 2011, the Company waived $751,000 and $1.5 million, respectively, of fund management fees from its commercial finance investment entities. |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
RSO dividends | $ | 534 | $ | 631 | |||
Interest income | 162 | 124 | |||||
Amortization of unrecognized loss - SERP (see Note 13) | (100 | ) | (83 | ) | |||
Other expense, net | (8 | ) | (113 | ) | |||
Other income, net | $ | 588 | $ | 559 |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Asset: | |||||||||||||||
Investment securities | $ | 15,166 | $ | — | $ | 10,367 | $ | 25,533 |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Investment securities | $ | 15,697 | $ | — | $ | 6,835 | $ | 22,532 |
Investment Securities | |||
Balance, beginning of year | $ | 6,835 | |
Purchases | 4,608 | ||
Income accreted | 223 | ||
Payments and distributions received | (613 | ) | |
Sales | (1,160 | ) | |
Gain on sales of trading securities | 307 | ||
Unrealized holding gain on trading securities | 164 | ||
Change in unrealized losses – included in accumulated other comprehensive loss | 3 | ||
Balance, end of period | $ | 10,367 |
Investment Securities | Retained Financial Interest | ||||||
Balance, beginning of year | $ | 2,356 | $ | 22 | |||
Purchases | 7,570 | — | |||||
Income accreted | 823 | — | |||||
Payments and distributions received | (2,827 | ) | — | ||||
Sales | (2,999 | ) | — | ||||
Impairment recognized in earnings | (74 | ) | — | ||||
Gains on sales of trading securities | 909 | — | |||||
Unrealized holding gain on trading securities | 1,108 | — | |||||
Deconsolidation of LEAF | — | (22 | ) | ||||
Change in unrealized losses – included in accumulated other comprehensive loss | (31 | ) | — | ||||
Balance, end of year | $ | 6,835 | $ | — |
Fair Value at December 31, 2012 | Valuation Technique | Unobservable Inputs | Assumptions (weighted average) | ||||||
CLO securities | $ | 5,002 | Discounted cash flow | Constant default rate | 2% | ||||
Loss severity rate | 30% | ||||||||
Constant prepayment rate | 25% | ||||||||
Reinvestment price on collateral | 99.5% | ||||||||
Discount rate | 20% |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Three Months Ended December 31 , 2012: | |||||||||||||||
Assets: | |||||||||||||||
Receivables from managed entities – commercial finance, real estate and financial fund management | $ | — | $ | — | $ | 14,506 | $ | 14,506 | |||||||
Fiscal Year Ended September 30, 2012: | |||||||||||||||
Assets: | |||||||||||||||
Receivables from managed entities – commercial finance and real estate | $ | — | $ | — | $ | 16,752 | $ | 16,752 | |||||||
Investment in real estate | — | 727 | — | 727 | |||||||||||
Investment in real estate - office building | — | — | 906 | 906 | |||||||||||
Investment in CVC Credit Partners | — | — | 28,600 | 28,600 | |||||||||||
Investment in Apidos-CVC preferred interest | — | — | 6,792 | 6,792 | |||||||||||
Investment in LEAF | — | — | 1,749 | 1,749 | |||||||||||
Total | $ | — | $ | 727 | $ | 54,799 | $ | 55,526 | |||||||
Liability: | |||||||||||||||
Apidos contractual commitment | $ | — | $ | — | $ | 589 | $ | 589 |
December 31, 2012 | September 30, 2012 | ||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
Assets: | |||||||||||||||
Receivables from managed entities | $ | 38,685 | $ | 38,685 | $ | 41,051 | $ | 41,051 | |||||||
$ | 38,685 | $ | 38,685 | $ | 41,051 | $ | 41,051 | ||||||||
Borrowings: | |||||||||||||||
Real estate debt | $ | 10,473 | $ | 11,398 | $ | 10,531 | $ | 11,554 | |||||||
Senior Notes | 10,000 | 11,728 | 10,000 | 11,364 | |||||||||||
Other debt | 2,137 | 2,117 | 2,489 | 2,491 | |||||||||||
$ | 22,610 | $ | 25,243 | $ | 23,020 | $ | 25,409 |
Real Estate | Financial Fund Management | Commercial Finance | All Other (1) | Total | |||||||||||||||
Three Months Ended December 31, 2012: | |||||||||||||||||||
Revenues from external customers | $ | 13,133 | $ | 1,371 | $ | — | $ | — | $ | 14,504 | |||||||||
Equity in earnings (losses) of unconsolidated entities | 21 | 1,304 | (124 | ) | — | 1,201 | |||||||||||||
Total revenues | 13,154 | 2,675 | (124 | ) | — | 15,705 | |||||||||||||
Segment operating expenses | (7,998 | ) | (1,017 | ) | 49 | — | (8,966 | ) | |||||||||||
General and administrative expenses | (83 | ) | (578 | ) | — | (1,595 | ) | (2,256 | ) | ||||||||||
Provision for credit losses | (190 | ) | (457 | ) | (4,505 | ) | — | (5,152 | ) | ||||||||||
Depreciation and amortization | (308 | ) | (22 | ) | — | (162 | ) | (492 | ) | ||||||||||
Interest expense | (212 | ) | — | — | (310 | ) | (522 | ) | |||||||||||
Other income (expense), net | 163 | 523 | — | (98 | ) | 588 | |||||||||||||
Pretax income attributable to noncontrolling interests (2) | (865 | ) | — | — | — | (865 | ) | ||||||||||||
Income (loss) excluding noncontrolling interest before intercompany interest expense and taxes | 3,661 | 1,124 | (4,580 | ) | (2,165 | ) | (1,960 | ) | |||||||||||
Intercompany interest (expense) income | — | — | — | — | — | ||||||||||||||
Income (loss) from continuing operations excluding noncontrolling interest before taxes | $ | 3,661 | $ | 1,124 | $ | (4,580 | ) | $ | (2,165 | ) | $ | (1,960 | ) |
Real Estate | Financial Fund Management | Commercial Finance | All Other (1) | Total | |||||||||||||||
Three Months Ended December 31, 2011: | |||||||||||||||||||
Revenues from external customers | $ | 8,060 | $ | 5,913 | $ | 4,134 | $ | — | $ | 18,107 | |||||||||
Equity in earnings (losses) of unconsolidated entities | 606 | 666 | (715 | ) | — | 557 | |||||||||||||
Total revenues | 8,666 | 6,579 | 3,419 | — | 18,664 | ||||||||||||||
Segment operating expenses | (7,192 | ) | (5,804 | ) | (1,963 | ) | — | (14,959 | ) | ||||||||||
General and administrative expenses | (78 | ) | (869 | ) | — | (1,949 | ) | (2,896 | ) | ||||||||||
Gain on sale of leases and loans | — | — | 37 | — | 37 | ||||||||||||||
Provision for credit losses | (104 | ) | — | (2,146 | ) | — | (2,250 | ) | |||||||||||
Depreciation and amortization | (323 | ) | (37 | ) | (1,556 | ) | (145 | ) | (2,061 | ) | |||||||||
Gain on deconsolidation of subsidiary | — | — | 8,749 | — | 8,749 | ||||||||||||||
Loss on extinguishment of debt | — | — | — | (2,190 | ) | (2,190 | ) | ||||||||||||
Gain on sale of investment securities, net | — | 41 | — | 17 | 58 | ||||||||||||||
Interest expense | (215 | ) | — | (1,691 | ) | (1,068 | ) | (2,974 | ) | ||||||||||
Other income (expense), net | 117 | 577 | — | (135 | ) | 559 | |||||||||||||
Pretax loss attributable to noncontrolling interests (2) | (25 | ) | — | (224 | ) | — | (249 | ) | |||||||||||
Income (loss) excluding noncontrolling interests before intercompany interest expense and taxes | 846 | 487 | 4,625 | (5,470 | ) | 488 | |||||||||||||
Intercompany interest (expense) income | — | — | (29 | ) | 29 | — | |||||||||||||
Income (loss) from continuing operations excluding noncontrolling interests before taxes | $ | 846 | $ | 487 | $ | 4,596 | $ | (5,441 | ) | $ | 488 |
Real Estate | Financial Fund Management | Commercial Finance | All Other (1) | Total | |||||||||||||||
Segment assets | |||||||||||||||||||
December 31, 2012 | $ | 170,900 | $ | 77,225 | $ | 11,876 | $ | (69,671 | ) | $ | 190,330 | ||||||||
December 31, 2011 | 162,757 | 36,927 | 30,516 | (51,865 | ) | 178,335 |
(1) | Includes general corporate expenses and assets not allocable to any particular segment. |
(2) | In viewing its segment operations, management excludes the pretax (income) loss attributable to noncontrolling interests. However, these interests are included from (loss) income from operations as computed in accordance with U.S. GAAP and should be deducted to compute (loss) income from operations as reflected in the Company’s consolidated statements of operations. |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
December 31, | Increase (Decrease) | ||||||||||||
2012 | 2011 | Amount | Percentage | ||||||||||
Financial fund management (2) | $ | 13,007 | $ | 11,145 | $ | 1,862 | 17% | ||||||
Real estate | 1,795 | 1,610 | 185 | 11% | |||||||||
Commercial finance | 529 | 549 | (20 | ) | (4)% | ||||||||
$ | 15,331 | $ | 13,304 | $ | 2,027 | 15% |
(1) | We describe how we calculate assets under management, in the notes to the third table of this section. |
(2) | The increase is primarily due to the $2.1 billion addition of the CVC portfolio contributed in April 2012 to CVC Credit Partners, our joint venture with CVC in which we own 33%, and the addition of Apidos CLO X ($450.0 million). This increase was offset, in part, by reductions in the eligible collateral bases of our ABS ($282.6 million), corporate loan ($166.4 million) and trust preferred portfolios ($287.2 million) resulting from defaults, paydowns, sales and calls. |
CDOs and CLOs | Limited Partnerships | TIC Programs | Other Investment Funds | ||||
As of December 31, 2012 | |||||||
Financial fund management | 44 | 13 | — | 3 | |||
Real estate | 2 | 9 | 6 | 6 | |||
Commercial finance | — | 4 | — | 2 | |||
46 | 26 | 6 | 11 | ||||
As of December 31, 2011 | |||||||
Financial fund management | 38 | 13 | — | 1 | |||
Real estate | 2 | 8 | 6 | 5 | |||
Commercial finance | — | 4 | — | 2 | |||
40 | 25 | 6 | 8 |
December 31, 2012 | December 31, 2011 | ||||||||||||||||||
Institutional and Individual Investors | RSO | Company | Total | Total | |||||||||||||||
Bank loans (1) | $ | 5,368 | $ | 2,735 | $ | — | $ | 8,103 | $ | 5,666 | |||||||||
Trust preferred securities (1) | 3,582 | — | — | 3,582 | 3,869 | ||||||||||||||
Asset-backed securities (1) | 1,208 | — | — | 1,208 | 1,490 | ||||||||||||||
Mortgage and other real estate-related loans (2) | 17 | 962 | — | 979 | 881 | ||||||||||||||
Real properties (2) | 717 | 83 | 16 | 816 | 729 | ||||||||||||||
Commercial finance assets (3) | 529 | — | — | 529 | 549 | ||||||||||||||
Private equity and other assets (1) | 98 | 16 | — | 114 | 120 | ||||||||||||||
$ | 11,519 | $ | 3,796 | $ | 16 | $ | 15,331 | $ | 13,304 |
(1) | We value these assets at their amortized cost. |
(2) | We value our managed real estate assets as the sum of: (i) the amortized cost of our commercial real estate loans; and (ii) the book value of each of the following: (a) real estate and other assets held by our real estate investment entities, (b) our outstanding legacy loan portfolio, and (c) our interests in real estate. |
(3) | We value our commercial finance assets as the sum of the book value of the financed equipment and leases and loans. |
Total | Real Estate | Financial Fund Management (1) | Corporate/ Other (2) | ||||
December 31, 2012 | |||||||
Investment professionals | 57 | 43 | 11 | 3 | |||
Other | 65 | 18 | 13 | 34 | |||
122 | 61 | 24 | 37 | ||||
Property management | 490 | 490 | — | — | |||
Total | 612 | 551 | 24 | 37 | |||
December 31, 2011 | |||||||
Investment professionals | 69 | 39 | 28 | 2 | |||
Other | 70 | 19 | 12 | 39 | |||
139 | 58 | 40 | 41 | ||||
Property management | 413 | 413 | — | — | |||
Total | 552 | 471 | 40 | 41 |
(1) | Decrease due to the April 2012 deconsolidation of Apidos as a result of the transaction with CVC. |
(2) | As a result of the November 2011 deconsolidation of LEAF, we no longer have any commercial finance employees. |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Fund management revenues (1) | $ | 7,228 | $ | 8,449 | |||
Finance and rental revenues (2) | 3,333 | 6,099 | |||||
RSO management fees | 4,659 | 3,689 | |||||
Gains on resolution of loans (3) | — | 60 | |||||
Other revenues (4) | 485 | 367 | |||||
$ | 15,705 | $ | 18,664 |
(1) | Includes fees from each of our real estate, financial fund management and commercial finance operations and our share of the income or loss from limited and general partnership interests we own in our real estate, financial fund management and commercial finance operations. |
(2) | Includes rental income, revenues from certain real estate assets and interest income on bank loans from our financial fund management operations. For periods prior to November 2011, includes interest and rental income from our commercial finance operations. |
(3) | Includes the resolution of loans we hold in our real estate segment. |
(4) | Includes gains (losses) on trading securities. For periods prior to November 2011, primarily includes insurance fees, documentation fees and other charges earned by our commercial finance operations. |
• | the acquisition, ownership and management of portfolios of discounted real estate and real estate related debt, which we have acquired through two sponsored real estate investment entities as well as through joint ventures with institutional investors; |
• | the management of sponsored real estate investment entities that principally invest in multifamily housing; |
• | the management, principally for RSO, of general investments in commercial real estate debt, including first mortgage debt, whole loans, mortgage participations, B notes, mezzanine debt and related commercial real estate securities; and |
• | to a significantly lesser extent, the management and resolution of a portfolio of real estate loans and property interests that we acquired at various times between 1991 and 1999, which we collectively refer to as our legacy portfolio. |
December 31, | |||||||
2012 | 2011 | ||||||
Assets under management (1): | |||||||
Commercial real estate debt | $ | 916 | $ | 792 | |||
Real estate investment funds and programs | 582 | 566 | |||||
RRE Opportunity REIT | 131 | 44 | |||||
Distressed portfolios | 71 | 114 | |||||
Properties managed for RSO | 64 | 60 | |||||
Institutional portfolios | 15 | 15 | |||||
Legacy portfolio | 16 | 19 | |||||
$ | 1,795 | $ | 1,610 |
(1) | For information on how we calculate assets under management, see “Assets under Management”, above. |
Three Months Ended | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
Revenues: | |||||||
Management fees: | |||||||
Asset management fees | $ | 2,224 | $ | 1,847 | |||
Resource Residential property management fees | 2,025 | 1,637 | |||||
REIT management fees from RSO | 4,667 | 1,383 | |||||
8,916 | 4,867 | ||||||
Other: | |||||||
Rental property income and revenues of consolidated VIE (1) | 1,429 | 1,313 | |||||
Master lease revenues | 1,073 | 1,019 | |||||
Fee income from sponsorship of investment entities | 884 | 801 | |||||
Gains and fees on resolution of loans and other property interests | 831 | 60 | |||||
Equity in earnings of unconsolidated entities | 21 | 606 | |||||
$ | 13,154 | $ | 8,666 | ||||
Costs and expenses: | |||||||
General and administrative expenses | $ | 4,168 | $ | 3,747 | |||
Resource Residential property management expenses | 2,089 | 1,598 | |||||
Master lease expenses | 1,073 | 1,016 | |||||
Rental property expenses and expenses of consolidated VIE (1) | 668 | 831 | |||||
$ | 7,998 | $ | 7,192 |
(1) | We generally consolidate a variable interest entity, or VIE, when we are deemed to be the primary beneficiary of the entity. |
• | a $377,000 increase in asset management fees, reflecting a $534,000 increase in broker-dealer manager fees earned for raising funds for RRE Opportunity REIT, partly offset by a $217,000 increase in the discount recorded for management fees that we expect to receive in future periods; |
• | a $388,000 increase in property management fees earned by our property manager, Resource Residential, reflecting a 4,063 unit increase (27%) in multifamily units under management to 19,267 units at December 31, 2012 from 15,204 units at December 31, 2011; and |
• | a $3.3 million increase in REIT management fees from RSO. The base management fees increased by $670,000 due to the increase in the equity of RSO upon which this fee is based. We also earned incentive management fees of $2.6 million during the three months ended December 31, 2012, as compared to none for the same period last year. The incentive management fees are based on the adjusted operating earnings of RSO, which vary by quarter. |
• | a $771,000 increase in gains and fees on resolution of loans and investment entities. In November 2012, we sold a commercial property located in Elkins, West Virginia which was consolidated through a VIE, recognizing a gain of $831,000, of which $793,000 was attributable to noncontrolling interests; |
• | an $83,000 increase in fee income in connection with the purchase and third-party financing of properties through our real estate investment entities, as follows: |
• | during the three months ended December 31, 2012, we earned $884,000 in fees primarily from the following activities: |
• | the acquisition of five properties (valued at $28.9 million); and |
• | the sale of one property (valued at $16.1 million). |
• | in comparison, during the three months ended December 31, 2011, we earned $801,000 in fees primarily from the following activities: |
• | the acquisition of one property (valued at $8.3 million); and |
• | the sale of two properties and two loans. |
• | a $585,000 decrease in the equity in earnings of unconsolidated entities. During the three months ended December 31, 2012, we earned equity income of $21,000. The three months ended December 31, 2011 included a $750,000 gain in conjunction with the release of funds from escrow related to the fiscal 2011 sale of a Washington, DC office building held by one of our legacy portfolio investments. |
• | a $421,000 increase in general and administrative expenses principally related to a $228,000 increase in wages and benefits, reflecting the additional staffing required to manage the increased properties under management as well as the additional personnel hired at Resource Securities to increase our fundraising capabilities; and |
• | a $491,000 increase in Resource Residential expenses due to increased wages and benefits, principally in conjunction with the additional personnel needed to operate and manage the increased number of properties. |
• | CVC Credit Partners, a joint venture between us and CVC, finances, structures and manages investments in bank loans, high yield bonds and equity investments through CLO issuers, managed accounts and a credit opportunities fund. Prior to April 17, 2012, we conducted these operations through our Apidos subsidiary; |
• | Trapeza Capital Management, LLC, or TCM, a joint venture between us and an unrelated third party, manages investments in trust preferred securities and senior debt securities of banks, bank holding companies, insurance companies and other financial companies through CDO issuers and related partnerships. TCM, together with the Trapeza CDO issuers and Trapeza partnerships, are collectively referred to as Trapeza; |
• | Resource Financial Institutions Group, Inc., or RFIG, serves as the general partner for seven company-sponsored affiliated partnerships which invest in financial institutions; |
• | Ischus Capital Management, LLC, or Ischus, finances, structures and manages investments in ABS including residential mortgage-backed securities, or RMBS, and commercial mortgage-backed securities, or CMBS; |
• | Resource Capital Markets, Inc., or Resource Capital Markets, through our registered broker-dealer subsidiary, Resource Securities, Inc., or Resource Securities, acts as an agent in the primary and secondary markets for structured finance securities and manages accounts for institutional investors; and |
• | Resource Capital Manager, Inc., or RCM, an indirect wholly-owned subsidiary, provides investment management and administrative services to RSO under a management agreement between us, RCM and RSO. |
Institutional and Individual Investors | RSO | Total by Type | |||||||||
December 31, 2012 | |||||||||||
CVC Credit Partners (2) | $ | 5,368 | $ | 2,735 | $ | 8,103 | |||||
Trapeza | 3,582 | — | 3,582 | ||||||||
Ischus | 1,208 | — | 1,208 | ||||||||
Other company-sponsored partnerships | 98 | 16 | 114 | ||||||||
$ | 10,256 | $ | 2,751 | $ | 13,007 | ||||||
December 31, 2011 | |||||||||||
Apidos (2) | $ | 2,700 | $ | 2,966 | $ | 5,666 | |||||
Trapeza | 3,869 | — | 3,869 | ||||||||
Ischus | 1,490 | — | 1,490 | ||||||||
Other company-sponsored partnerships | 84 | 36 | 120 | ||||||||
$ | 8,143 | $ | 3,002 | $ | 11,145 |
(1) | For information on how we calculate assets under management, see "Assets Under Management”, above. |
(2) | In April 2012, we sold 100% of Apidos to CVC and retained a 33% interest in CVC Credit Partners, which manages the former Apidos portfolio as well as the portfolio contributed by CVC. |
• | Collateral management fees − we receive fees for managing the assets held by CLO and CDO issuers we have sponsored, including subordinate and incentive fees. These fees vary by issuer, with our annual fees ranging between 0.1% and 0.35% of the aggregate principal balance of the eligible collateral owned by the issuers. The indentures to the notes require that certain overcollateralization test ratios, or O/C ratios, be maintained. O/C ratios measure the ratio of assets (collateral) to liabilities (notes) of a given issuer. Losses incurred on collateral due to payment defaults, payment deferrals or rating agency downgrades reduce the O/C ratios. If specified O/C ratios are not met by an issuer, subordinate or incentive management fees, which are discussed in the following sections, are deferred and interest collections from collateral are applied to outstanding principal balances on the notes, typically in order of seniority. |
• | Administration fees − we receive fees for managing the assets held by our company-sponsored partnerships and through April 2012, our credit opportunities fund (which is now being managed by CVC Credit Partners). These fees vary by limited partnership or fund, with our annual fee ranging between 0.75% and 2.00% of the partnership or fund capital balance. |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Revenues: | |||||||
Fund management fees | $ | 738 | $ | 3,827 | |||
RSO management fees - trading portfolio | (8 | ) | 1,855 | ||||
RSO management fees | — | 451 | |||||
Introductory agent fees | 440 | 151 | |||||
Equity in earnings of unconsolidated CDO issuers | 220 | 194 | |||||
Equity in earnings of CVC Credit Partners | 865 | — | |||||
Gains, net, on trading securities | 483 | — | |||||
Other revenues | 2 | — | |||||
2,740 | 6,478 | ||||||
Total limited and general partner interests | (65 | ) | 101 | ||||
$ | 2,675 | $ | 6,579 | ||||
Costs and expenses: | |||||||
General and administrative expenses | $ | 1,017 | $ | 5,804 |
• | a decrease of $3.5 million in revenues due to the April 2012 deconsolidation of Apidos, comprised of the following: |
◦ | a $3.1 million decrease in fund management fees, principally the $3.0 million decrease in CLO collateral management and partnership management fees; and |
◦ | a $451,000 decrease in RSO base management fees; |
• | a $1.9 million decrease in incentive management fees earned on managing a trading portfolio on behalf of RSO; |
• | a $289,000 increase in introductory agent fees as a result of fees earned in connection with eight structured security transactions with an average fee of $55,000 for fiscal 2013 as compared to seven structured security transactions with an average fee of $22,000 for the prior year period; |
• | an $891,000 increase in our equity in the earnings of unconsolidated entities, reflecting $865,000 of income attributable to our interest in CVC Credit Partners; |
• | a $483,000 net increase in realized and unrealized gains, and interest recorded on trading securities purchased since June 2013; and |
• | a $166,000 decrease in our share of realized and unrealized fair value adjustments recorded relative to our limited and general partner interests held in unconsolidated company-sponsored partnerships, the value of which depends on market conditions and may vary significantly year to year. |
• | a $3.2 million reduction in the profit-sharing arrangement with certain employees in connection with the portfolio management activities conducted on behalf of RSO; and |
• | a $1.3 million reduction in wages and benefits due to the reduced number of employees in connection with the sale of Apidos to CVC and the related formation of our CVC Credit Partners joint venture with CVC. |
December 31, | |||||||
2012 | 2011 | ||||||
LEAF | $ | 381 | $ | 230 | |||
Commercial finance investment entities | 148 | 319 | |||||
$ | 529 | $ | 549 |
(1) | For information on how we calculate assets under management, see - “Assets under Management”, above. |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Revenues:(1) | |||||||
Equity in losses of investment entities | (119 | ) | (150 | ) | |||
Equity in losses of LEAF | (5 | ) | (565 | ) | |||
(124 | ) | (715 | ) | ||||
Other: | |||||||
Finance revenues | $ | — | $ | 3,767 | |||
Other fees | — | 367 | |||||
$ | (124 | ) | $ | 3,419 | |||
Costs and expenses: | |||||||
General and administrative expenses - wages and benefit costs | $ | 57 | $ | 1,875 | |||
General and administrative expenses - other | (106 | ) | 740 | ||||
Less: deferred initial direct costs and fees | — | (652 | ) | ||||
$ | (49 | ) | $ | 1,963 |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Commercial finance: | |||||||
Receivables from managed entities | $ | 4,508 | $ | 1,995 | |||
Leases, loans and future payment card receivables | (3 | ) | 151 | ||||
Real estate: | |||||||
Receivables from managed entities | 155 | 90 | |||||
Rent receivables | 35 | 14 | |||||
Financial fund management - receivables from managed entities | 457 | $ | — | ||||
$ | 5,152 | $ | 2,250 |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
LEAF | $ | — | $ | 1,556 | |||
Other operating segments | 492 | 505 | |||||
Total depreciation expense | $ | 492 | $ | 2,061 |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Corporate | 310 | 1,068 | |||||
Real estate | 212 | 215 | |||||
Commercial finance | $ | — | $ | 1,691 | |||
$ | 522 | $ | 2,974 |
Three Months Ended December 31, | |||
2012 | 2011 | ||
Corporate facilities | |||
Senior Notes: (1) | |||
Average borrowings | $10.0 | $15.5 | |
Average interest rates | 9.5% | 11.4% | |
Secured credit facilities (and TD Bank term note in fiscal 2012): | |||
Average borrowings | $— | $6.2 | |
Average interest rates | —% | 6.0% | |
Commercial finance (transferred and/or terminated facilities) (2) | |||
Secured credit facilities: | |||
Average borrowings | $— | $68.8 | |
Average interest rates | —% | 4.2% | |
Term securitizations: | |||
Average borrowings | $— | $112.8 | |
Average interest rates | —% | 4.2% |
(1) | In November 2011, we refinanced the Senior Notes through a partial redemption and modification, which reduced the principal balance outstanding from $18.8 million to $10.0 million and reduced the interest rate from 12% to 9%. |
(2) | The amounts presented for commercial finance for fiscal 2012 reflect activity during the period from October 1 to November 16, 2011. Subsequently, these facilities have been deconsolidated from our consolidated financial statements. |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
RSO dividend income | $ | 534 | $ | 631 | |||
Interest income (1) | 162 | 124 | |||||
Amortization of unrecognized loss - retirement plan (2) | (100 | ) | (83 | ) | |||
Other expense, net (3) | (8 | ) | (113 | ) | |||
Other income, net | $ | 588 | $ | 559 |
(1) | Includes accretion of discount on receivables from real estate managed entities of $140,000 and $100,000 for the three months ended December 31, 2012 and 2011, respectively |
(2) | Includes amortization of losses in the securities held in the retirement plan for our former Chief Executive Officer. |
(3) | Included in other income, net, for the three months ended December 31, 2011 is $108,000 of foreign currency translation losses for our European operations. |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Real estate: | |||||||
Related-party interest in our hotel property(1) | $ | (71 | ) | $ | (25 | ) | |
Outside interests in a commercial property, net of tax of $278 and $0(2) | (516 | ) | — | ||||
Commercial finance: | |||||||
RSO investment in LEAF preferred stock(3) | — | (571 | ) | ||||
Stock-based compensation(4) | — | 218 | |||||
$ | (587 | ) | $ | (378 | ) |
(1) | A related party holds a 19.99% interest in our investment in a hotel property in Savannah, Georgia. |
(2) | A third party's interest in a commercial real estate property in Elkins, West Virginia that we consolidated as a VIE. The property underlying the loan was sold and our investment was resolved during the three months ended December 31, 2012. |
(3) | In the January 2011 formation of LEAF, RSO received 3,743 shares of LEAF Series A preferred stock and warrants to purchase 4,800 shares of LEAF common stock at $0.01 per share. The warrants were recorded as a discount to the preferred stock and were amortized over the five-year term of the warrants. As a result of the deconsolidation of LEAF, this noncontrolling interest was eliminated. |
(4) | Senior executives of LEAF held a 13.9% interest in LEAF Financial as of December 31, 2010. In January 2011, these shares were exchanged for a 21.98% interest in LEAF (10% on a fully diluted basis). As a result of the deconsolidation of LEAF, we no longer record this noncontrolling interest. |
• | cash on hand of $11.9 million; |
• | $10.4 million of availability under our two corporate credit facilities; |
• | potential disposition of non-core assets; and |
• | cash generated from operations. |
Payments Due By Period | |||||||||||||||||||
Total | Less than 1 Year | 1 – 3 Years | 4 – 5 Years | After 5 Years | |||||||||||||||
Contractual obligations: | |||||||||||||||||||
Non-recourse to the Company: | |||||||||||||||||||
Mortgage - hotel property (1) | $ | 10,473 | $ | 186 | $ | 410 | $ | 464 | $ | 9,413 | |||||||||
Recourse to the Company: | |||||||||||||||||||
Other debt (1) | 11,875 | 305 | 11,570 | — | — | ||||||||||||||
Capital lease obligations (1) | 262 | 262 | — | — | — | ||||||||||||||
12,137 | 567 | 11,570 | — | — | |||||||||||||||
Operating lease obligations | 17,036 | 1,910 | 4,052 | 4,034 | 7,040 | ||||||||||||||
Other long-term liabilities | 8,756 | 1,349 | 1,609 | 1,486 | 4,312 | ||||||||||||||
Total contractual obligations | $ | 48,402 | $ | 4,012 | $ | 17,641 | $ | 5,984 | $ | 20,765 |
(1) | Not included in the table above are estimated interest payments calculated at rates in effect at December 31, 2012; less than 1 year: $1.7 million; 1-3 years: $2.6 million; 4-5 years: $1.2 million; and after 5 years: $2.1 million. |
Amount of Commitment Expiration Per Period | |||||||||||||||||||
Total | Less than 1 Year | 1 – 3 Years | 4 – 5 Years | After 5 Years | |||||||||||||||
Other commercial commitments: | |||||||||||||||||||
Guarantees | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Real estate commitments | 958 | 958 | — | — | — | ||||||||||||||
Standby letters of credit | 803 | 803 | — | — | — | ||||||||||||||
Total commercial commitments | $ | 1,761 | $ | 1,761 | $ | — | $ | — | $ | — |
• | analyzed and confirmed the accuracy of any significant changes in the methods and assumptions used in valuing our legacy real estate portfolio; and |
• | formalized our new documentation processes and procedures relative to these valuations. |
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 | Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Plans or Programs | |||||||||
October 1 to October 31, 2012 | 77,098 | $ | 6.62 | 289,501 | 704,330 | ||||||||
November 1 to November 30, 2012 | 68,733 | $ | 6.58 | 358,234 | 635,597 | ||||||||
December 1 to December 31, 2012 | 16,708 | $ | 6.89 | 374,942 | 618,889 | ||||||||
Total | 162,539 | $ | 6.63 |
(1) | The average price per share as reflected above includes broker fees and commissions. |
Exhibit No. | Description | |
3.1 | Restated Certificate of Incorporation of Resource America. (1) | |
3.2 | Amended and Restated Bylaws of Resource America. (1) | |
4.1 | Note Purchase Agreement (including the form of Senior Note and form of Warrant). (2) | |
4.1 (a) | Form of 9% Senior Note due 2015. (14) | |
10.1(a) | Amended and Restated Loan and Security Agreement, dated March 10, 2011, between Resource America, Inc. and TD Bank, N.A. (5) | |
10.1(b) | First Amendment to the Amended and Restated Loan and Security Agreement, dated as of November 29, 2011, between Resource America, Inc. and TD Bank, N.A. (7) | |
10.1(c) | Second Amendment to the Amended and Restated Loan and Security Agreement and Joinder to Loan Documents, dated as of February 15, 2012, between Resource America, Inc. and TD Bank, N.A and the Joining Guarantors set forth therein. (11) | |
10.1(d) | Third Amendment to the Amended and Restated Loan and Security Agreement and Joinder to Loan Documents, dated as of November 16, 2012, between Resource America, Inc. and TD Bank, N.A and the Joining Guarantors set forth therein. (13) | |
10.2 | Amended and Restated Employment Agreement between Michael S. Yecies and Resource America, Inc., dated December 29, 2008. (3) | |
10.3 | Amended and Restated Employment Agreement between Thomas C. Elliott and Resource America, Inc., dated December 29, 2008. (3) | |
10.4 | Amended and Restated Employment Agreement between Jeffrey F. Brotman and Resource America, Inc., dated December 29, 2008. (3) | |
10.5 | Amended and Restated Employment Agreement between Jonathan Z. Cohen and Resource America, Inc., dated December 29, 2008. (3) | |
10.6 | Amended and Restated Employment Agreement between Steven J. Kessler and Resource America, Inc., dated December 29, 2008. (3) | |
10.7(a) | Loan Agreement between and among Republic First Bank (d/b/a Republic Bank) and Resource Capital Investor, Inc. and Resource Properties XXX, Inc. (4) | |
10.7(b) | Loan Modification Agreement between and among Republic First Bank (d/b/a Republic Bank) and Resource Capital Investor, Inc. and Resource Properties XXX, Inc. (6) | |
10.7(c) | Second Loan Modification Agreement between and among Republic First Bank (d/b/a Republic Bank) and Resource Capital Investor, Inc. and Resource Properties XXX, Inc. (9) | |
10.7(d) | Third Loan Modification Agreement between and among Republic First Bank (d/b/a Republic Bank) and Resource Capital Investor, Inc. and Resource Properties XXX, Inc. (12) | |
10.8 | Settlement Agreement, dated January 9, 2012, by and among Raging Capital Group and Resource America, Inc. (8) | |
10.9 | Sale and Purchase Agreement between Resource America, Inc. and CVC Capital Partners SICAV-FIS, S.A. dated December 29, 2011. (10) | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
99.1 | Stock Purchase Agreement by and among LEAF Commercial Capital, Inc., LEAF Financial Corporation, Resource TRS, Inc., Resource Capital Corp., Resource America, Inc. and the Purchasers named therein, dated November 16, 2011. (10) | |
99.2 | Amended and Restated Certificate of Incorporation of LEAF Commercial Capital, Inc., dated November 16, 2011. (10) | |
99.3 | LEAF Commercial Capital, Inc. Stockholders' Agreement, dated November 16, 2011. (10) | |
101 | Interactive Data Files |
(1) | Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended December 31, 1999 and by this reference incorporated herein. |
(2) | Files previously as an exhibit to our Current Report on Form 8-K filed on October 1, 2009 and by this reference incorporated herein. |
(3) | Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 and by this reference incorporated herein. |
(4) | Filed previously as an exhibit to our Current Report on Form 8-K filed on March 3, 2011 and by this reference incorporated herein. |
(5) | Filed previously as an exhibit to our Current Report on Form 8-K filed on March 15, 2011 and by this reference incorporated herein. |
(6) | Filed previously as an exhibit to our Current Report on Form 8-K filed on September 28, 2011 and by this reference incorporated herein. |
(7) | Filed previously as an exhibit to our Current Report on Form 8-K filed on December 2, 2011 and by this reference incorporated herein. |
(8) | Filed previously as an exhibit to our Current Report on Form 8-K filed on January 11, 2012 and by this reference incorporated herein. |
(9) | Filed previously as an exhibit to our Current Report on Form 8-K filed on January 17, 2012 and by this reference incorporated herein. |
(10) | Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended December 31, 2011, and by this reference incorporated herein. |
(11) | Filed previously as an exhibit to our Current Report on Form 8-K filed on February 15, 2012, and by this reference incorporated herein. |
(12) | Filed previously as an exhibit to our Current Report on Form 8-K filed on October 31, 2012 and by this reference incorporated herein. |
(13) | Filed previously as an exhibit to our Current Report on Form 8-K filed on November 19, 2012 and by this reference incorporated herein. |
(14) | Filed previously as an exhibit to our Current Report on Form 8-K filed on December 18, 2012 and by this reference incorporated herein. |
RESOURCE AMERICA, INC. | ||
(Registrant) | ||
February 8, 2013 | By: | /s/ Thomas C. Elliott |
THOMAS C. ELLIOTT | ||
Senior Vice President and Chief Financial Office | ||
February 8, 2013 | By: | /s/ Arthur J. Miller |
ARTHUR J. MILLER | ||
Vice President and Chief Accounting Officer |
1) | I have reviewed this report on Form 10-Q for the quarterly period ended December 31, 2012 of Resource America, Inc.; |
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. |
/s/ Jonathan Z. Cohen | |
Date: February 8, 2013 | Jonathan Z. Cohen |
Chief Executive Officer |
1) | I have reviewed this report on Form 10-Q for the quarterly period ended December 31, 2012 of Resource America, Inc.; |
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. |
/s/ Thomas C. Elliott | |
Date: February 8, 2013 | Thomas C. Elliott |
Senior Vice President and Chief Financial Officer |
(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. |
/s/ Jonathan Z. Cohen | |
Date: February 8, 2013 | Jonathan Z. Cohen |
Chief Executive Officer |
(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. |
/s/ Thomas C. Elliott | |
Date: February 8, 2013 | Thomas C. Elliott |
Senior Vice President and Chief Financial Officer |
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BENEFIT PLANS (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Costs for the SERP | The components of net periodic benefit costs for the SERP were as follows (in thousands):
|
INVESTMENT SECURITIES (Available-for-sale Securities, Continuous Unrealized Loss Position) (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
Security
|
Sep. 30, 2012
Security
|
---|---|---|
Less than 12 Months [Abstract] | ||
Fair Value | $ 193 | $ 1,274 |
Unrealized Losses | (13) | (15) |
Number of Securities | 1 | 1 |
More than 12 Months [Abstract] | ||
Fair Value | 12,280 | 12,161 |
Unrealized Losses | (18,579) | (17,976) |
Number of Securities | 1 | 1 |
Equity Securities [Member]
|
||
Less than 12 Months [Abstract] | ||
Fair Value | 193 | 0 |
Unrealized Losses | (13) | 0 |
Number of Securities | 1 | 0 |
More than 12 Months [Abstract] | ||
Fair Value | 12,280 | 12,161 |
Unrealized Losses | (18,579) | (17,976) |
Number of Securities | 1 | 1 |
CDO Securities [Member]
|
||
Less than 12 Months [Abstract] | ||
Fair Value | 0 | 1,274 |
Unrealized Losses | 0 | (15) |
Number of Securities | 0 | 1 |
More than 12 Months [Abstract] | ||
Fair Value | 0 | 0 |
Unrealized Losses | $ 0 | $ 0 |
Number of Securities | 0 | 0 |
FINANCING RECEIVABLES (Impaired Financing Receivables) (Details) (USD $)
|
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2012
|
Sep. 30, 2012
|
|
Financing Receivables Without a Specific Valuation Allowance [Member]
|
||
Financing Receivable, Impaired [Line Items] | ||
Impaired Financing Receivable, with No Related Allowance, Recorded Investment | $ 0 | $ 0 |
Receivables from Managed Entities - Commercial Finance [Member]
|
||
Impaired financing receivables [Abstract] | ||
Specific Allowance | 25,078,000 | |
Receivables from Managed Entities - Commercial Finance [Member] | Financing receivables with a specific valuation allowance [Member]
|
||
Impaired financing receivables [Abstract] | ||
Net Balance | 8,633,000 | 12,865,000 |
Unpaid Balance | 38,219,000 | 37,943,000 |
Specific Allowance | 29,586,000 | 25,078,000 |
Average Investment in Impaired Assets | 38,110,000 | 38,060,000 |
Receivables from Managed Entities - Real Estate [Member]
|
||
Impaired financing receivables [Abstract] | ||
Specific Allowance | 2,502,000 | |
Receivables from Managed Entities - Real Estate [Member] | Financing receivables with a specific valuation allowance [Member]
|
||
Impaired financing receivables [Abstract] | ||
Net Balance | 2,291,000 | 2,181,000 |
Unpaid Balance | 4,808,000 | 4,683,000 |
Specific Allowance | 2,517,000 | 2,502,000 |
Average Investment in Impaired Assets | 4,630,000 | 4,511,000 |
Receivables from managed entities financial fund management [Member] [Domain] | Financing receivables with a specific valuation allowance [Member]
|
||
Impaired financing receivables [Abstract] | ||
Net Balance | 848,000 | |
Unpaid Balance | 1,305,000 | |
Specific Allowance | 457,000 | |
Average Investment in Impaired Assets | 1,305,000 | |
Rent Receivables - Real Estate [Member] | Financing receivables with a specific valuation allowance [Member]
|
||
Impaired financing receivables [Abstract] | ||
Net Balance | 0 | 12,000 |
Unpaid Balance | 68,000 | 45,000 |
Specific Allowance | 68,000 | 33,000 |
Average Investment in Impaired Assets | $ 40,000 | $ 45,000 |
BENEFIT PLANS (Components of Net Periodic Benefit Cost) (Details) (USD $)
|
3 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Defined Benefit Plan Disclosure [Line Items] | ||
Plus: Amortization of unrecognized loss | $ 100,000 | $ 83,000 |
Supplemental Employee Retirement Plan [Member]
|
||
Defined Benefit Plan Disclosure [Line Items] | ||
Interest cost | 59,000 | 80,000 |
Less: expected return on plan assets | (23,000) | (18,000) |
Plus: Amortization of unrecognized loss | 100,000 | 83,000 |
Net cost | 136,000 | 145,000 |
Chief Executive Officer [Member] | Supplemental Employee Retirement Plan [Member]
|
||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Benefits Paid | $ 838,000 | |
Maximum [Member] | Chief Executive Officer [Member] | Supplemental Employee Retirement Plan [Member]
|
||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Benefits Paid, Period | 10 years |
FAIR VALUE (Assets and Liabilities Recorded at Fair Value on Recurring Basis) (Details) (Recurring Basis [Member], USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
Sep. 30, 2012
|
---|---|---|
Asset: | ||
Investment securities | $ 25,533 | $ 22,532 |
Level 1 [Member]
|
||
Asset: | ||
Investment securities | 15,166 | 15,697 |
Level 2 [Member]
|
||
Asset: | ||
Investment securities | 0 | 0 |
Level 3 [Member]
|
||
Asset: | ||
Investment securities | $ 10,367 | $ 6,835 |
FINANCING RECEIVABLES (Past Due Financing Receivables) (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
Sep. 30, 2012
|
||||||
---|---|---|---|---|---|---|---|---|
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
30-89 Days Past Due | $ 867 | $ 796 | ||||||
Greater than 90 Days | 754 | 2,695 | ||||||
Greater than 181 Days | 57,279 | 54,092 | ||||||
Total Past Due | 58,900 | 57,583 | ||||||
Current | 12,457 | 11,093 | ||||||
Balance, end of year | 71,357 | 68,676 | ||||||
Receivables from Managed Entities - Commercial Finance [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
30-89 Days Past Due | 0 | [1] | 0 | [2] | ||||
Greater than 90 Days | 0 | [1] | 0 | [2] | ||||
Greater than 181 Days | 40,112 | [1] | 38,834 | [2] | ||||
Total Past Due | 40,112 | [1] | 38,834 | [2] | ||||
Current | 118 | [1] | 148 | |||||
Balance, end of year | 40,230 | [1] | 38,982 | [2] | ||||
Specific Allowance | 25,078 | |||||||
Real Estate Investment Entities [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
30-89 Days Past Due | 816 | [1] | 784 | [2] | ||||
Greater than 90 Days | 744 | [1] | 2,694 | [2] | ||||
Greater than 181 Days | 17,062 | [1] | 15,180 | [2] | ||||
Total Past Due | 18,622 | [1] | 18,658 | [2] | ||||
Current | 2,002 | [1] | 2,091 | |||||
Balance, end of year | 20,624 | [1] | 20,749 | [2] | ||||
Specific Allowance | 2,502 | |||||||
Financial Fund Management Entities [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
30-89 Days Past Due | 6 | [1] | 6 | [2] | ||||
Greater than 90 Days | 0 | [1] | 0 | [2] | ||||
Greater than 181 Days | 47 | [1] | 46 | [2] | ||||
Total Past Due | 53 | [1] | 52 | [2] | ||||
Current | 2,140 | [1] | 2,141 | |||||
Balance, end of year | 2,193 | [1] | 2,193 | [2] | ||||
Resource Capital Corp [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
30-89 Days Past Due | 0 | [1] | 0 | [2] | ||||
Greater than 90 Days | 0 | [1] | 0 | [2] | ||||
Greater than 181 Days | 0 | [1] | 0 | [2] | ||||
Total Past Due | 0 | [1] | 0 | [2] | ||||
Current | 8,020 | [1] | 6,555 | |||||
Balance, end of year | 8,020 | [1] | 6,555 | [2] | ||||
Other [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
30-89 Days Past Due | 41 | [1] | 0 | [2] | ||||
Greater than 90 Days | 0 | [1] | 0 | [2] | ||||
Greater than 181 Days | 0 | [1] | 0 | [2] | ||||
Total Past Due | 41 | [1] | 0 | [2] | ||||
Current | 137 | [1] | 152 | |||||
Balance, end of year | 178 | [1] | 152 | [2] | ||||
Receivables from Managed Entities and Related Parties [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
30-89 Days Past Due | 863 | [1] | 790 | [2] | ||||
Greater than 90 Days | 744 | [1] | 2,694 | [2] | ||||
Greater than 181 Days | 57,221 | [1] | 54,060 | [2] | ||||
Total Past Due | 58,828 | [1] | 57,544 | [2] | ||||
Current | 12,417 | [1] | 11,087 | |||||
Balance, end of year | 71,245 | [1] | 68,631 | [2] | ||||
Rent Receivables - Real Estate [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
30-89 Days Past Due | 4 | 6 | ||||||
Greater than 90 Days | 10 | 1 | ||||||
Greater than 181 Days | 58 | 32 | ||||||
Total Past Due | 72 | 39 | ||||||
Current | 40 | 6 | ||||||
Balance, end of year | 112 | 45 | ||||||
Financing receivables with a specific valuation allowance [Member] | Receivables from Managed Entities - Commercial Finance [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
Specific Allowance | 29,586 | 25,078 | ||||||
Financing receivables with a specific valuation allowance [Member] | Real Estate Investment Entities [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
Specific Allowance | 2,517 | 2,502 | ||||||
Financing receivables with a specific valuation allowance [Member] | Rent Receivables - Real Estate [Member]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
Specific Allowance | 68 | 33 | ||||||
Financing receivables with a specific valuation allowance [Member] | Receivables from managed entities financial fund management [Member] [Domain]
|
||||||||
Aging of the Company's past due financing receivables, gross of allowances for credit losses | ||||||||
Specific Allowance | $ 457 | |||||||
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Unconsolidated Entities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Company's Investments in Investment Vehicles, Including the Range of Interests it Owns | The following table details the Company’s investments in these vehicles, including the range of ownership interests owned (in thousands, except percentages):
|
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Relationship with Brandywine Construction & Management, Inc. (“BCMI”)) (Details) (Brandywine Construction & Management, Inc. (BCMI) [Member], USD $)
|
1 Months Ended | |
---|---|---|
Nov. 30, 2012
|
Dec. 31, 2012
Real_Estate_Investment_Trust
|
|
Brandywine Construction & Management, Inc. (BCMI) [Member]
|
||
Related Party Transaction [Line Items] | ||
Number of entities managed by related parties | 1 | |
Costs and Expenses, Related Party | $ 95,000 |
VARIABLE INTEREST ENTITIES (Consolidated and Nonconsolidated VIEs) (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
---|---|
Variable Interest Entities [Abstract] | |
Cash and property and equipment, net | $ 727 |
Accrued expenses and other liabilities | $ 189 |
OTHER INCOME, NET (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Related Party Transaction [Line Items] | ||
Interest income | $ 162 | $ 124 |
Defined Benefit Plan, Amortization of Gains (Losses) | (100) | (83) |
Other expense, net | (8) | (113) |
Other income, net | 588 | 559 |
Resource Capital Corp [Member]
|
||
Related Party Transaction [Line Items] | ||
RSO dividends | $ 534 | $ 631 |
SUBSEQUENT EVENTS Sale of investment (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
|
Subsequent Event [Line Items] | ||
Equity Method Investment, Ownership Percentage | 10.00% | |
Proceeds from Sale of Equity Method Investments | $ 3.0 |
FAIR VALUE (Narrative) (Details) (USD $)
|
3 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Sep. 30, 2012
Investment in LEAF [Member]
|
Sep. 30, 2012
Non-recurring Basis [Member]
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Past due receivable, days outstanding to fully reserve balance | 180 days | ||
Estimated recovery percentage (in hundredths) | 12.40% | ||
Investment in CVC Credit Partners | $ 28,600,000 | ||
Fair value of the Company's investment in the preferred shares | 6,792,000 | ||
Future incentive management fees | 589,000 | ||
Valuation of company's investment | $ 1,700,000 |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Receivables and Payables from Related Party) (Details) (USD $)
|
Dec. 31, 2012
Entity
|
Sep. 30, 2012
|
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Related Party Transaction [Line Items] | ||||||||||
Receivables from managed entities and related parties | $ 38,685,000 | $ 41,051,000 | ||||||||
Payables to managed entities and related parties | 3,567,000 | 4,380,000 | ||||||||
Number of investment entities that are not expected to be collectible | 3 | |||||||||
Number of real estate investment entities receivables that are not expected to be collectible | 2 | |||||||||
Receivables from Managed Entities - Commercial Finance [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Specific Allowance | 25,078,000 | |||||||||
Real Estate Investment Entities [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Specific Allowance | 2,502,000 | |||||||||
Payable to real estate investment entities, self insurance | 3,200,000 | |||||||||
Commercial Finance Investment Entities [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Receivables from managed entities and related parties | 10,644,000 | [1] | 13,904,000 | [1] | ||||||
Real Estate Investment Entities [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Receivables from managed entities and related parties | 18,107,000 | [2] | 18,247,000 | [2] | ||||||
Payables to managed entities and related parties | 3,300,000 | [3] | 3,900,000 | [3] | ||||||
Financial Fund Management Investment Entities [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Receivables from managed entities and related parties | 1,736,000 | 2,193,000 | ||||||||
Resource Capital Corp [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Receivables from managed entities and related parties | 8,020,000 | 6,555,000 | ||||||||
Other [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Receivables from managed entities and related parties | 178,000 | 152,000 | ||||||||
Payables to managed entities and related parties | 267,000 | 480,000 | ||||||||
Financing receivables with a specific valuation allowance [Member] | Receivables from Managed Entities - Commercial Finance [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Specific Allowance | 29,586,000 | 25,078,000 | ||||||||
Financing receivables with a specific valuation allowance [Member] | Real Estate Investment Entities [Member]
|
||||||||||
Related Party Transaction [Line Items] | ||||||||||
Specific Allowance | $ 2,517,000 | $ 2,502,000 | ||||||||
|
COMMITMENTS AND CONTINGENCIES
|
3 Months Ended |
---|---|
Dec. 31, 2012
|
|
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES LEAF lease valuation commitment. In conjunction with the third-party equity investment in LEAF, the Company and RSO have undertaken a contingent obligation with respect to the value of the equity on the balance sheet of LRF3. To the extent that the value of the equity on the balance sheet of LRF3 is less than $18.7 million (the value of the equity of LRF3 on the date it was contributed by RSO to LEAF), as of the final testing date within 90 days of December 31, 2013, the Company and RSO have agreed to be jointly and severally obligated to contribute cash to LEAF to the extent of any shortfall. The LRF3 equity as of December 31, 2012 was in excess of this commitment and, therefore, the Company was not required to record a liability with respect to this obligation. Limited loan guarantee. The Company and two of its commercial finance investment partnerships, Lease Equity Appreciation Fund I, L.P. (“LEAF I”) and Lease Equity Appreciation Fund II, L.P. (“LEAF II”), have provided a limited guarantee to a lender to the LEAF partnerships in exchange for a waiver of any existing defaulted loan covenants and certain future financial covenants. The loans mature at the earlier of (a) the maturity date (March 20, 2014 for LEAF I and December 21, 2013 for LEAF II), or (b) the date on which an event of default under the loan agreement occurs. The maximum guarantee provided by the Company is up to $7.3 million ($2.3 million for LEAF I and $5.0 million for LEAF II). If the Company were required to make any such payments under the guarantee in the future, it would have the option to either step in as the lender or otherwise make a capital contribution to the LEAF partnerships for the amount of the required guarantee payment. Under certain circumstances, the lender will also discount its loans by approximately $250,000 for LEAF I and $347,500 for LEAF II. Management has determined that, based on projected cash flows from the underlying lease and loan portfolios collateralizing the loans, there should be sufficient funds to repay the LEAF partnerships' outstanding loan balances and, accordingly, the Company was not required to record a liability with respect to the guarantee. Broker-Dealer Capital Requirement. Resource Securities serves as a dealer-manager for the sale of securities of direct participation investment programs, both public and private, sponsored by subsidiaries of the Company who also serve as general partners and/or managers of these programs. Additionally, Resource Securities serves as an introducing agent for transactions involving sales of securities of financial services companies, REITs and insurance companies for the Company and for RSO. As a broker-dealer, Resource Securities is required to maintain minimum net capital, as defined in regulations under the Securities Exchange Act of 1934, as amended, which was $113,000 and $100,000 as of December 31, 2012 and September 30, 2012, respectively. As of December 31, 2012 and September 30, 2012, Resource Securities net capital was $258,000 and $447,000, respectively, which exceeded the minimum requirements by $145,000 and $347,000, respectively. Clawback liability. On November 1, 2009 and January 28, 2010, the general partners of two of the Trapeza entities, which are owned equally by the Company and its co-managing partner, repurchased substantially all of the remaining limited partnership interests in the two Trapeza entities with potential clawback liabilities for $4.4 million. The Company contributed $2.2 million (its 50% share). The clawback liability was $1.2 million at December 31, 2012 and September 30, 2012. Legal proceedings. In September 2011, First Community Bank, (“First Community”) filed a complaint against First Tennessee Bank and approximately thirty other defendants consisting of investment banks, rating agencies, collateral managers, including Trapeza Capital Management, LLC (“TCM”), and issuers of CDOs, including Trapeza CDO XIII, Ltd. and Trapeza CDO XIII, Inc. TCM and the Trapeza CDO issuers are collectively referred to as Trapeza. The complaint includes causes of action against TCM for fraud, negligent misrepresentation, violation of the Tennessee Securities Act of 1980 and unjust enrichment. First Community alleges, among other things, that it invested in certain CDOs, that the defendant rating agencies assigned inflated investment grade ratings to the CDOs, and that the defendant investment banks, collateral managers and issuers (including Trapeza) fraudulently and/or negligently made “materially false and misleading representations and omissions” that First Community relied on in investing in the CDOs, including both written representations in offering materials and unspecified oral representations. Specifically, with respect to Trapeza, First Community alleges that it purchased $20 million of notes in the D tranche of the Trapeza CDO XIII transaction from J.P. Morgan. The Court dismissed this matter in June 2012. First Community filed a Notice of Appeal in July 2012. The Company is also a party to various routine legal proceedings arising out of the ordinary course of business. Management believes that none of these actions, individually or, in the aggregate, will have a material adverse effect on the Company's consolidated financial condition or operations. Real estate commitments. As a specialized asset manager, the Company sponsors and manages investment funds in which it may make an equity investment along with outside investors. This equity investment is generally based on a percentage of funds raised and varies among investment programs. With respect to RRE Opportunity REIT, the Company is committed to invest 1% of the equity raised to a maximum amount of $2.5 million. This commitment has been reduced to $708,000 as of December 31, 2012 as a result of funds already invested to date. In July 2011, the Company entered into an agreement with one of the tenant-in-common ("TIC") real estate programs it sponsored and manages. This agreement requires the Company to fund up to $1.9 million for capital improvements for the TIC property over the next two years. The Company has advanced funds totaling $1.7 million as of December 31, 2012, which is included in Investments in real estate on the consolidated balance sheets. The liabilities for the real estate commitments will be recorded in the future as amounts become due and payable. General corporate commitments. The Company is also party to employment agreements with certain executives that provide for compensation and other benefits, including severance payments under specified circumstances. As of December 31, 2012, except for the clawback liability recorded for the two Trapeza entities and executive compensation, the Company did not believe it was probable that any payments would be required under any of its commitments and contingencies and, accordingly, no liabilities for these obligations were recorded in the consolidated financial statements. |
INVESTMENTS IN REAL ESTATE (Operating Leases) (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
---|---|
Real Estate Investments, Net [Abstract] | |
2013 | $ 944 |
2014 | 872 |
2015 | 662 |
2016 | 487 |
2017 | 396 |
Thereafter | 546 |
Total | $ 3,907 |
FAIR VALUE (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
|
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company's Asset Recorded at Fair Value on Recurring Basis | As of December 31, 2012, the fair values of the Company’s assets recorded at fair value on a recurring basis were as follows (in thousands):
As of September 30, 2012, the fair values of the Company’s assets recorded at fair value on a recurring basis were as follows (in thousands):
|
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Additional Information about Assets Measured at Fair Value on Recurring Basis for which the Company Has Utilized Level 3 Inputs to Determine Fair Value | The following table presents additional information about assets which were measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value during the three months ended December 31, 2012 (in thousands):
The following table presents additional information about assets which were measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value during for the fiscal year ended September 30, 2012 (in thousands):
|
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Quantitative Inputs and Assumptions in Determining the Fair Value of Items Categorized in Level 3 | The following table presents the Company's quantitative inputs and assumptions used in determining the fair value of items categorized in Level 3 (in thousands, except percentages):
|
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Changes in Carrying Value of Assets and Liabilities Measured at Fair Value on Non-recurring Basis | The Company recognized the following changes in carrying value of the assets and liabilities measured at fair value on a non-recurring basis, as follows (in thousands):
|
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Fair Value of Financial Instruments | The fair value of financial instruments required to be disclosed at fair value, excluding instruments valued on a recurring basis, is as follows (in thousands):
|
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Related party trading security transactions (Details) (Alesco Financial Inc [Member], USD $)
|
3 Months Ended |
---|---|
Dec. 31, 2012
|
|
Alesco Financial Inc [Member]
|
|
Related Party Transaction [Line Items] | |
Trading Securities, Realized Gain (Loss) | $ 121,000 |
Trading Securities, Cost | 239,000 |
Debt Instrument, Face Amount | $ 5,850,000 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
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Comprehensive Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss by Category | The following are changes in accumulated other comprehensive income (loss) by category (in thousands):
|
INVESTMENT SECURITIES (Components of Investment Securities) (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
Sep. 30, 2012
|
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Available-for-sale securities | $ 20,168 | $ 19,468 |
Trading securities | 5,365 | 3,064 |
Total investment securities, at fair value | $ 25,533 | $ 22,532 |
FINANCING RECEIVABLES (Allowance for Credit Losses) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Sep. 30, 2012
|
|||||||
Activity in the allowance for credit losses of financing receivables [Roll Forward] | |||||||||
Balance, beginning of year | $ 27,613 | $ 10,935 | |||||||
Provision for credit losses | 5,152 | 2,250 | |||||||
Charge-offs | (140) | (124) | |||||||
Recoveries | 3 | 25 | |||||||
Deconsolidation of LEAF | (482) | ||||||||
Balance, end of period | 32,628 | 12,604 | |||||||
Ending balance, individually evaluated for impairment | 32,560 | 12,575 | |||||||
Ending balance, collectively evaluated for impairment | 68 | 29 | |||||||
Balance, end of period | 32,628 | 12,604 | |||||||
Gross financing receivables related to the balance in the allowance for credit losses [Abstract] | |||||||||
Ending balance, individually evaluated for impairment | 71,245 | 68,631 | |||||||
Ending balance, collectively evaluated for impairment | 112 | 45 | |||||||
Balance, end of year | 71,357 | 68,676 | |||||||
Receivables from Managed Entities [Member]
|
|||||||||
Activity in the allowance for credit losses of financing receivables [Roll Forward] | |||||||||
Balance, beginning of year | 27,580 | 10,490 | |||||||
Provision for credit losses | 5,120 | 2,085 | |||||||
Charge-offs | (140) | 0 | |||||||
Recoveries | 0 | 0 | |||||||
Deconsolidation of LEAF | 0 | ||||||||
Balance, end of period | 32,560 | 12,575 | |||||||
Ending balance, individually evaluated for impairment | 32,560 | 12,575 | |||||||
Ending balance, collectively evaluated for impairment | 0 | 0 | |||||||
Balance, end of period | 32,560 | 12,575 | |||||||
Gross financing receivables related to the balance in the allowance for credit losses [Abstract] | |||||||||
Ending balance, individually evaluated for impairment | 71,245 | 68,631 | |||||||
Ending balance, collectively evaluated for impairment | 0 | 0 | |||||||
Balance, end of year | 71,245 | [1] | 68,631 | [2] | |||||
Leases and Loans [Member]
|
|||||||||
Activity in the allowance for credit losses of financing receivables [Roll Forward] | |||||||||
Balance, beginning of year | 0 | 430 | |||||||
Provision for credit losses | (3) | 151 | |||||||
Charge-offs | (124) | ||||||||
Recoveries | 3 | 25 | |||||||
Deconsolidation of LEAF | (482) | ||||||||
Balance, end of period | 0 | 0 | |||||||
Ending balance, individually evaluated for impairment | 0 | 0 | |||||||
Ending balance, collectively evaluated for impairment | 0 | 0 | |||||||
Balance, end of period | 0 | 0 | |||||||
Rent Receivables [Member]
|
|||||||||
Activity in the allowance for credit losses of financing receivables [Roll Forward] | |||||||||
Balance, beginning of year | 33 | 15 | |||||||
Provision for credit losses | 35 | 14 | |||||||
Charge-offs | 0 | 0 | |||||||
Recoveries | 0 | 0 | |||||||
Deconsolidation of LEAF | 0 | ||||||||
Balance, end of period | 68 | 29 | |||||||
Ending balance, individually evaluated for impairment | 0 | 0 | |||||||
Ending balance, collectively evaluated for impairment | 68 | 29 | |||||||
Balance, end of period | 68 | 29 | |||||||
Gross financing receivables related to the balance in the allowance for credit losses [Abstract] | |||||||||
Ending balance, individually evaluated for impairment | 0 | 0 | |||||||
Ending balance, collectively evaluated for impairment | 112 | 45 | |||||||
Balance, end of year | $ 112 | $ 45 | |||||||
|
NATURE OF OPERATIONS
|
3 Months Ended |
---|---|
Dec. 31, 2012
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Resource America, Inc. (the "Company") (NASDAQ: REXI) is a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its real estate, financial fund management, and commercial finance operating segments. As a specialized asset manager, the Company seeks to develop investment funds for outside investors for which the Company provides asset management services, typically under long-term management and operating arrangements either through a contract with, or as the manager or general partner of, the sponsored fund. The Company limits its investment funds to investment areas where it owns existing operating companies or has specific expertise. The Company manages assets on behalf of institutional and individual investors and Resource Capital Corp. (“RSO”) (NYSE: RSO), a diversified real estate finance company that qualifies as a real estate investment trust (“REIT”). The consolidated financial statements and the information and tables contained in the notes to the consolidated financial statements are unaudited. However, in the opinion of management, these interim financial statements include all adjustments necessary to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended September 30, 2012. The results of operations for the three months ended December 31, 2012 may not necessarily be indicative of the results of operations for the full year ending September 30, 2013. |
BORROWINGS (Senior Notes) (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
3 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Maximum [Member]
|
||
Debt Instrument [Line Items] | ||
Dividends per share, declared or paid for future quarter (in dollars per share) | $ 0.03 | |
Minimum [Member]
|
||
Debt Instrument [Line Items] | ||
Amount per share needed to declare or pay dividends (in dollars per share) | $ 0.25 | |
Senior Notes [Member]
|
||
Debt Instrument [Line Items] | ||
Remaining balance | $ 10.0 | |
Interest rate (in hundredths) | 9.00% | |
Debt modification fee percentage | 1.00% | |
Detachable warrants term | 5 years | |
Shares of common stock issued on warrants (in shares) | 3,690,195 | |
Write off of unamortized discount | $ 2.2 | |
Effective interest rate (in hundredths) | 9.50% | 20.60% |