CONSOLIDATING FINANCIAL INFORMATION

The following table presents the consolidating balance sheet as of September 30, 2013 (unaudited) (in thousands):



	RAI			RSO		Eliminations			Consolidated
ASSETS
Cash	$	19,439		$	—	$	—		$	19,439
Restricted cash	558			—		—			558
Receivables	3,444			—		(96		)	3,348
Receivables from managed entities and related parties, net	34,457			—		(4,169		)	30,288
Investments in real estate, net	17,128			—		—			17,128
Investment securities, at fair value	27,156			—		(17,398		)	9,758
Investments in unconsolidated loan manager	37,345			—		—			37,345
Investments in unconsolidated entities	13,899			—		—			13,899
Assets of consolidated VIE - RSO:				—
Cash and cash equivalents (including restricted cash)	—			203,658		—			203,658
Investments, at fair value	—			232,783		—			232,783
Loans	—			1,646,157		(1,570		)	1,644,587
Investments in real estate and unconsolidated entities	—			128,099		—			128,099
Other assets	—			62,367		(26		)	62,341
Total assets of consolidated VIE - RSO	—			2,273,064		(1,596		)	2,271,468

Property and equipment, net	4,955			—		—			4,955
Deferred tax assets, net	37,353			—		(7,602		)	29,751
Other assets	5,574			—		—			5,574
Total assets	$	201,308		$	2,273,064	$	(30,861	)	$	2,443,511

LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities	$	27,613		$	—	$	—		$	27,613
Payables to managed entities and related parties	3,063			—		(26		)	3,037
Borrowings	21,950			—		(1,570		)	20,380
Liabilities of consolidated VIE - RSO:
Borrowings	—			1,422,430		—			1,422,430
Other liabilities	—			67,220		(4,265		)	62,955
Total liabilities of consolidated VIE - RSO	—			1,489,650		(4,265		)	1,485,385
Total liabilities	52,626			1,489,650		(5,861		)	1,536,415

Commitments and contingencies

Equity:
Preferred stock	—			—		—			—
Common stock	299			—		—			299
Additional paid-in capital	288,238			—		—			288,238
Accumulated deficit	(23,009		)	—		(3,411		)	(26,420		)
Treasury stock, at cost	(104,869		)	—		—			(104,869		)
Accumulated other comprehensive (loss) income	(12,195		)	—		9,885			(2,310		)
Total stockholders’ equity	148,464			—		6,474			154,938
Noncontrolling interests	218			—		—			218
Noncontrolling interests attributable to RSO	—			783,414		(31,474		)	751,940
Total equity	148,682			783,414		(25,000		)	907,096
	$	201,308		$	2,273,064	$	(30,861	)	$	2,443,511

The following table presents the consolidating statement of operations for the three months ended September 30, 2013 (in thousands) (unaudited):



	RAI			RSO			Eliminations			Consolidated
REVENUES:
Real estate	$	15,950		$	—		$	—		$	15,950
Financial fund management	8,502			—			—			8,502
Commercial finance	(30		)	—			—			(30		)
Revenues from consolidated VIE - RSO	—			23,786			—			23,786
Elimination of consolidated revenues attributed to operating segments	—			—			(5,183		)	(5,183		)
	24,422			23,786			(5,183		)	43,025
COSTS AND EXPENSES:
Real estate	11,178			—			—			11,178
Financial fund management	3,547			—			—			3,547
Commercial finance	75			—			—			75
General and administrative	2,505			—			—			2,505
Provision for credit losses	1,808			—			—			1,808
Depreciation and amortization	413			—			—			413
Expenses from consolidated VIE - RSO	—			16,276			(722		)	15,554
Elimination of consolidated expenses attributed to operating segments	—			—			(4,861		)	(4,861		)
	19,526			16,276			(5,583		)	30,219
OPERATING INCOME	4,896			7,510			400			12,806

OTHER INCOME (EXPENSE):
Interest expense	(530		)	—			—			(530		)
Other income, net	684			—			(556		)	128
Other income from consolidated VIE - RSO	—			16,607			—			16,607
Elimination of consolidated VIE other income attributable to operating segments	—			—			162			162
	154			16,607			(394		)	16,367
Income from continuing operations before taxes	5,050			24,117			6			29,173
Income tax provision - RSO	—			—			722			722
Income tax provision - RAI	1,261			—			—			1,261
Net income (loss)	3,789			24,117			(716		)	27,190
Net income attributable to noncontrolling interests - RAI	(40		)	—			—			(40		)
Net income attributable to noncontrolling interests of consolidated VIE- RSO	—			(1,996		)	(21,712		)	(23,708		)
Net income (loss) attributable to common shareholders	$	3,749		$	22,121		$	(22,428	)	$	3,442

The following table presents the consolidating statement of operations for the nine months ended September 30, 2013 (in thousands) (unaudited):



	RAI			RSO			Eliminations			Consolidated
REVENUES:
Real estate	$	39,443		$	—		$	—		$	39,443
Financial fund management	15,234			—			—			15,234
Commercial finance	(243		)	—			—			(243		)
Revenues from consolidated VIE - RSO	—			76,011			—			76,011
Elimination of consolidated revenues attributed to operating segments	—			—			(10,608		)	(10,608		)
	54,434			76,011			(10,608		)	119,837
COSTS AND EXPENSES:
Real estate	29,514			—			—			29,514
Financial fund management	7,769			—			—			7,769
Commercial finance	(99		)	—			—			(99		)
General and administrative	6,807			—			—			6,807
Provision for credit losses	3,793			—			—			3,793
Depreciation and amortization	1,318			—			—			1,318
Expenses from consolidated VIE - RSO	—			47,331			(4,221		)	43,110
Elimination of consolidated expenses attributed to operating segments	—			—			(10,178		)	(10,178		)
	49,102			47,331			(14,399		)	82,034
OPERATING INCOME	5,332			28,680			3,791			37,803

OTHER INCOME (EXPENSE):
Other-than-temporary impairment on investments	(214		)							(214		)
Interest expense	(1,525		)	—			—			(1,525		)
Other income, net	2,069			—			(1,669		)	400
Other income from consolidated VIE - RSO	—			16,607			—			16,607
Elimination of consolidated VIE other income attributable to operating segments	—			—			224			224
	330			16,607			(1,445		)	15,492
Income from continuing operations before taxes	5,662			45,287			2,346			53,295
Income tax provision - RSO	—			—			4,221			4,221
Income tax benefit - RAI	(396		)	—			—			(396		)
Income from continuing operations	6,058			45,287			(1,875		)	49,470
Loss from discontinued operations, net of tax	(2		)	—			—			(2		)
Net income	6,056			45,287			(1,875		)	49,468
Net income attributable to noncontrolling interests - RAI	(23		)	—			—			(23		)
Net income attributable to noncontrolling interests of consolidated VIE - RSO	—			(5,107		)	(39,287		)	(44,394		)
Net income (loss) attributable to common shareholders	$	6,033		$	40,180		$	(41,162	)	$	5,051

The following table presents the consolidating statement of cash flows for the nine months ended September 30, 2013 (in thousands) (unaudited):



	RAI			RSO			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	6,056		$	45,287		$	(1,875	)	$	49,468
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization	1,462			—			—			1,462
Other-than-temporary impairment charges	214			—			—			214
Provision for credit losses	3,793			—			—			3,793
Unrealized gain on trading securities	(1,073		)	—			299			(774		)
Equity in earnings of unconsolidated entities	(2,528		)	—			—			(2,528		)
Distributions from unconsolidated entities	3,099			—			—			3,099
Gain on sale of assets	(1,632		)	—			—			(1,632		)
Gain on sale of loans and investment securities, net	(4,551		)	—			—			(4,551		)
Deferred income tax benefit	(254		)	—			—			(254		)
Equity-based compensation received	(654		)	—			654			—
Equity-based compensation issued	942			484			(484		)	942
Trading securities purchases and sales, net	6,445			—			—			6,445
Loss from discontinued operations	2			—			—			2
Changes in operating assets and liabilities	1,465			—			—			1,465
Change in cash attributable to consolidated VIE - RSO	—			(38,124		)	(291		)	(38,415		)
Net cash provided by (used in) operating activities	12,786			7,647			(1,697		)	18,736

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(1,035		)	—			—			(1,035		)
Payments received on real estate loans and real estate	2,049			—			—			2,049
Investments in unconsolidated real estate entities	(2,058		)	—			—			(2,058		)
Principal payments received on leases and loans	8			—			—			8
Purchase of loans and securities by consolidated VIE - RSO	—			(675,650		)	—			(675,650		)
Principal payments and proceeds from sales received by consolidated VIE - RSO	—			842,252			—			842,252
Purchase of loans and investments	(2,024		)	—			—			(2,024		)
Proceeds from sale of loans and investment securities	—			—			—			—
Increase in restricted cash - consolidated VIE RSO	—			30,079			—			30,079
Other - consolidated VIE - RSO	—			13,318			28			13,346
Net cash provided by (used in) in investing activities	(3,060		)	209,999			28			206,967

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings	2,000			—			—			2,000
Principal payments on borrowings	(2,354		)	—			—			(2,354		)
Proceeds from issuance of common stock	1,253			—			—			1,253
Net borrowings (repayments) of debt by consolidated VIE - RSO	—			(320,834		)	—			(320,834		)
Dividends paid	(1,194		)	—			—			(1,194		)
Dividends paid on common stock by consolidated VIE - RSO	—			(68,010		)	1,669			(66,341		)
Net proceeds from issuance of common stock by consolidated VIE - RSO	—			184,279			—			184,279
Repurchase of common stock	(1,601		)	—			—			(1,601		)
Other	81			—			—			81
Other - consolidated VIE - RSO	—			(13,081		)	—			(13,081		)
Net cash (used in) provided by financing activities	(1,815		)	(217,646		)	1,669			(217,792		)

CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities	(371		)	—			—			(371		)
Net cash used in discontinued operations	(371		)	—			—			(371		)

Increase in cash	7,540			—			—			7,540
Cash, beginning of year	11,899			—			—			11,899
Cash, end of period	$	19,439		$	—		$	—		$	19,439