NOTE 3 - CONSOLIDATING FINANCIAL INFORMATION

The following table presents the consolidating balance sheet as of June 30, 2015 (in thousands):



	RAI			RSO		Eliminations			Consolidated
ASSETS
Cash	$	23,760		$	—	$	—		$	23,760
Restricted cash	886			—		—			886
Receivables	1,181			—		(120		)	1,061
Receivables from managed entities and related parties, net	28,874			—		(2,354		)	26,520
Investments in real estate, net	17,040			—		—			17,040
Investment securities, at fair value	21,944			—		(11,074		)	10,870
Investments in unconsolidated loan manager	36,526			—		—			36,526
Investments in unconsolidated entities	24,883			—		(7,999		)	16,884
Assets of consolidated VIE-RSO:
Cash and cash equivalents (including restricted cash)	—			190,765		—			190,765
Investments, at fair value	—			286,108		—			286,108
Loans	—			2,154,007		—			2,154,007
Investments in real estate and unconsolidated entities	—			56,330		—			56,330
Other assets-RSO	—			87,014		—			87,014
Total assets of consolidated VIE-RSO	—			2,774,224		—			2,774,224
Property and equipment, net	5,622			—		—			5,622
Deferred tax assets, net	31,954			—		(11,034		)	20,920
Other assets	8,392			—		—			8,392
Total assets	$	201,062		$	2,774,224	$	(32,581	)	$	2,942,705

LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities	$	21,241		$	—	$	—		$	21,241
Payables to managed entities and related parties	4,748			—		—			4,748
Borrowings	21,029			—		—			21,029
Liabilities of consolidated VIE-RSO:
Borrowings	—			1,827,461		332			1,827,793
Other liabilities	—			54,114		(2,474		)	51,640
Total liabilities of consolidated VIE-RSO	—			1,881,575		(2,142		)	1,879,433
Total liabilities	47,018			1,881,575		(2,142		)	1,926,451
Commitments and contingencies

Equity:
Preferred stock	—			—		—			—
Common stock	338			—		—			338
Additional paid-in capital	309,736			—		—			309,736
Accumulated deficit	(18,369		)	—		(9,274		)	(27,643		)
Treasury stock, at cost	(124,736		)	—		—			(124,736		)
Accumulated other comprehensive loss	(13,301		)	—		12,386			(915		)
Total stockholders’ equity	153,668			—		3,112			156,780
Noncontrolling interests	376			—		—			376
Noncontrolling interests attributable to consolidated VIE-RSO	—			892,649		(33,551		)	859,098
Total equity	154,044			892,649		(30,439		)	1,016,254
Total liabilities and equity	$	201,062		$	2,774,224	$	(32,581	)	$	2,942,705

The following table presents the consolidating statement of operations for the three months ended June 30, 2015 (in thousands):



	RAI			RSO			Eliminations			Consolidated
REVENUES:
Real estate	$	21,116		$	—		$	—		$	21,116
Financial fund management	4,781			—			—			4,781
Commercial finance	2			—			—			2
	25,899			—			—			25,899
Revenues from consolidated VIE-RSO	—			24,201			—			24,201
Elimination of consolidated VIE-RSO revenues attributed to operating segments	—			—			(4,104		)	(4,104		)
Total revenues	25,899			24,201			(4,104		)	45,996
COSTS AND EXPENSES:
Real estate	12,082			—			—			12,082
Financial fund management	3,154			—			—			3,154
Commercial finance	458			—			—			458
General and administrative	4,181			—			—			4,181
Provision for credit losses	276			—			—			276
Depreciation and amortization	515			—			—			515
	20,666			—			—			20,666
Expenses of consolidated VIE-RSO	—			54,535			—			54,535
Elimination of consolidated VIE-RSO expenses attributed to operating segments	—			—			(3,368		)	(3,368		)
Total expenses	20,666			54,535			(3,368		)	71,833
OPERATING INCOME (LOSS)	5,233			(30,334		)	(736		)	(25,837		)

OTHER INCOME (EXPENSE):
Impairment on investment in unconsolidated entities	(4,346		)	—			—			(4,346		)
Interest expense	(455		)	—			—			(455		)
Other income (expense), net	689			—			(458		)	231
Other income (expense), net, from consolidated VIE-RSO	—			10,537			—			10,537
Elimination of consolidated VIE-RSO other income, net	—			—			4			4
Total other income (expense)	(4,112		)	10,537			(454		)	5,971
Income (loss) from continuing operations before taxes	1,121			(19,797		)	(1,190		)	(19,866		)
Income tax provision (benefit)	857			2,918			—			3,775
Net income (loss)	264			(22,715		)	(1,190		)	(23,641		)
Net (income) loss attributable to noncontrolling interests	(63		)	—			—			(63		)
Net (income) loss attributable to noncontrolling interests-RSO	—			(8,296		)	30,348			22,052
Net income (loss) attributable to common shareholders	$	201		$	(31,011	)	$	29,158		$	(1,652	)

The following table presents the consolidating statement of operations for the three months ended June 30, 2014 (in thousands):



	RAI			RSO			Eliminations			Consolidated
REVENUES:
Real estate	$	13,448		$	—		$	—		$	13,448
Financial fund management	8,141			—			—			8,141
Commercial finance	(42		)	—			—			(42		)
	21,547			—			—			21,547
Revenues from consolidated VIE-RSO	—			23,828			—			23,828
Elimination of consolidated VIE-RSO revenues attributed to operating segments	—			—			(3,040		)	(3,040		)
Total revenues	21,547			23,828			(3,040		)	42,335
COSTS AND EXPENSES:
Real estate	9,105			—			—			9,105
Financial fund management	2,779			—			—			2,779
Commercial finance	123			—			—			123
General and administrative	2,729			—			—			2,729
Provision for credit losses	1,575			—			—			1,575
Depreciation and amortization	465			—			—			465
Total other income (expense)	16,776			—			—			16,776
Expenses of consolidated VIE-RSO	—			16,853						16,853
Elimination of consolidated VIE-RSO expenses attributed to operating segments	—			—			(3,053		)	(3,053		)
Total expenses	16,776			16,853			(3,053		)	30,576
OPERATING INCOME (LOSS)	4,771			6,975			13			11,759

OTHER INCOME (EXPENSE):
Gain (loss) on sale of investment securities, net	370			—			—			370
Interest expense	(497		)	—			—			(497		)
Other income (expense), net	590			—			(572		)	18
Other income (expense), net, from consolidated VIE-RSO	—			10,281			—			10,281
Elimination of consolidated VIE-RSO other income, net	—			—			11			11
	463			10,281			(561		)	10,183
Income (loss) from continuing operations before taxes	5,234			17,256			(548		)	21,942
Income tax provision (benefit)	2,181			(446		)	—			1,735
Net income (loss)	3,053			17,702			(548		)	20,207
Income (loss) from continuing operations before taxes	(84		)	—			—			(84		)
Net (income) loss attributable to noncontrolling interests-RSO	—			(3,025		)	(14,380		)	(17,405		)
Net income (loss) attributable to common shareholders	$	2,969		$	14,677		$	(14,928	)	$	2,718

The following table presents the consolidating statement of operations for the six months ended June 30, 2015 (in thousands):



	RAI			RSO			Eliminations			Consolidated
REVENUES:
Real estate	$	38,082		$	—		$	—		$	38,082
Financial fund management	9,918			—			—			9,918
Commercial finance	—			—			—			—
	48,000			—			—			48,000
Revenues from consolidated VIE-RSO	—			48,562			—			48,562
Elimination of consolidated VIE-RSO revenues attributed to operating segments	—			—			(8,377		)	(8,377		)
Total revenues	48,000			48,562			(8,377		)	88,185
COSTS AND EXPENSES:
Real estate	23,581			—			—			23,581
Financial fund management	6,144			—			—			6,144
Commercial finance	1,037			—			—			1,037
General and administrative	7,478			—			—			7,478
Provision for credit losses	678			—			—			678
Depreciation and amortization	972			—			—			972
Total other income (expense)	39,890			—			—			39,890
Expenses of consolidated VIE-RSO	—			75,595			—			75,595
Elimination of consolidated VIE-RSO expenses attributed to operating segments	—			—			(6,736		)	(6,736		)
Total expenses	39,890			75,595			(6,736		)	108,749
OPERATING INCOME (LOSS)	8,110			(27,033		)	(1,641		)	(20,564		)

OTHER INCOME (EXPENSE):
Impairment on investment in unconsolidated entities	(4,346		)	—			—			(4,346		)
Interest expense	(876		)	—			—			(876		)
Other income (expense), net	1,003			—			(936		)	67
Other income (expense), net, from consolidated VIE-RSO	—			27,053			—			27,053
Elimination of consolidated VIE-RSO other income, net	—			—			15			15
	(4,219		)	27,053			(921		)	21,913
Income (loss) from continuing operations before taxes	3,891			20			(2,562		)	1,349
Income tax provision (benefit)	2,101			4,765			—			6,866
Net income (loss)	1,790			(4,745		)	(2,562		)	(5,517		)
Net (income) loss attributable to noncontrolling interests	(55		)	—			—			(55		)
Net (income) loss attributable to noncontrolling interests-RSO	—			(16,864		)	21,121			4,257
Net income (loss) attributable to common shareholders	$	1,735		$	(21,609	)	$	18,559		$	(1,315	)

The following table presents the consolidating statement of operations for the six months ended June 30, 2014 (in thousands):



	RAI			RSO			Eliminations			Consolidated
REVENUES:
Real estate	$	26,723		$	—		$	—		$	26,723
Financial fund management	15,216			—			—			15,216
Commercial finance	(141		)	—			—			(141		)
	41,798			—			—			41,798
Revenues from consolidated VIE-RSO	—			49,073			—			49,073
Elimination of consolidated VIE-RSO revenues attributed to operating segments	—			—			(5,920		)	(5,920		)
Total revenues	41,798			49,073			(5,920		)	84,951
COSTS AND EXPENSES:
Real estate	17,980			—			—			17,980
Financial fund management	7,168			—			—			7,168
Commercial finance	226			—			—			226
General and administrative	5,883			—			—			5,883
Provision for credit losses	2,783			—			—			2,783
Depreciation and amortization	916			—			—			916
Total other income (expense)	34,956			—			—			34,956
Expenses of consolidated VIE-RSO	—			28,138			—			28,138
Elimination of consolidated VIE-RSO expenses attributed to operating segments	—			—			(5,872		)	(5,872		)
Total expenses	34,956			28,138			(5,872		)	57,222
OPERATING INCOME (LOSS)	6,842			20,935			(48		)	27,729

OTHER INCOME (EXPENSE):
Gain on sale of investment securities, net	370			—			—			370
Interest expense	(980		)	—			—			(980		)
Other income (expense), net	1,327			—			(1,144		)	183
Other income (expense), net, from consolidated VIE-RSO	—			13,797			—			13,797
Elimination of consolidated VIE-RSO other income, net	—			—			29			29
	717			13,797			(1,115		)	13,399
Income (loss) from continuing operations before taxes	7,559			34,732			(1,163		)	41,128
Income tax provision (benefit)	3,250			(430		)	—			2,820
Net income (loss)	4,309			35,162			(1,163		)	38,308
Net (income) loss attributable to noncontrolling interests	(44		)	—			—			(44		)
Net (income) loss attributable to noncontrolling interests-RSO	—			(5,369		)	(29,187		)	(34,556		)
Net income (loss) attributable to common shareholders	$	4,265		$	29,793		$	(30,350	)	$	3,708

The following table presents the consolidating statement of cash flows for the six months ended June 30, 2015 (in thousands):



	RAI			RSO			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	1,790		$	(4,745	)	$	(2,562	)	$	(5,517	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,004			—			—			1,004
Provision for credit losses	678			—			—			678
Unrealized gain (loss) on trading securities	(42		)	—			—			(42		)
Equity in (earnings) losses of unconsolidated entities	(6,296		)	—			1,555			(4,741		)
Distributions from unconsolidated entities	4,998			—			—			4,998
Impairment on investment in unconsolidated entities	4,346			—			—			4,346
(Gain) loss on sales of leases and loans	(5		)	—			—			(5		)
Deferred income tax provision	2,052			—			—			2,052
Equity-based compensation issued	1,604			—			—			1,604
Foreign currency adjustments	284			—			—			284
(Gain) loss on trading securities	15			—			—			15
Trading securities purchases and sales, net	221			—			—			221
Changes in operating assets and liabilities	153			—			—			153
Adjustments to reconcile net income and operating cash flows to net income of consolidated VIE-RSO	—			(17,512		)	(29		)	(17,541		)
Net cash provided by (used in) operating activities	10,802			(22,257		)	(1,036		)	(12,491		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(352		)	—			—			(352		)
Principal payments on leases and loans	5			—			—			5
Investments in real estate and unconsolidated real estate entities	(3,295		)	—			—			(3,295		)
Purchase of loans and securities by consolidated VIE-RSO	—			(447,760		)	—			(447,760		)
Principal payments and proceeds from sales of loans and securities by consolidated VIE-RSO	—			390,488			—			390,488
Purchase of loans and investments	(2,687		)	—			—			(2,687		)
Decrease (increase) in restricted cash of consolidated VIE-RSO	—			57,089			—			57,089
Other investing activity of consolidated VIE-RSO	—			4,806			(821		)	3,985
Net cash provided by (used) in investing activities	(6,329		)	4,623			(821		)	(2,527		)



	RAI			RSO			Eliminations		Consolidated
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on borrowings	(821		)	—			821		—
Net borrowings by consolidated VIE-RSO	—			84,283			—		84,283
Dividends paid	(2,622		)	—			—		(2,622		)
Dividends paid on common stock by consolidated VIE-RSO	—			(48,006		)	936		(47,070		)
Proceeds from issuance of common stock	1			—			—		1
Net proceeds from issuance of common stock by consolidated VIE-RSO	—			3,159			—		3,159
Other financing activity of consolidated VIE - RSO	—			(21,802		)	100		(21,702		)
Net cash (used in) provided by financing activities	(8,255		)	17,634			1,857		11,236

Decrease in cash	(3,782		)	—			—		(3,782		)
Cash, beginning of year	27,542			—			—		27,542
Cash, end of period	$	23,760		$	—		$	—	$	23,760