 Resource
America, Inc. July 2014
Exhibit 99.1 |
 2
This document and the related presentation may contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include, but are not limited to, statements about Resource America,
Inc.’s
("REXI") plans, objectives, expectations, projections, illustrations and intentions with respect to future operations, and other
statements that are not historical facts. Forward-looking
statements are sometimes identified by the words "may", "will", "should",
"potential", "predict", "continue",
"project", “illustrate”, "guide", or other similar words or expressions. These forward-looking
statements are based upon the current beliefs and expectations of REXI’s management and are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of
which are difficult to predict and generally not within REXI’s
control. In addition, these forward-looking statements are subject
to assumptions with respect to future business strategies and decisions
that are subject to change. REXI does not guarantee that the
assumptions underlying such forward looking statements are free from
errors. Actual results could differ materially from the anticipated
results or other expectations expressed in the forward-looking
statements and REXI urges you to review the underlying assumptions and
the risk factors and other disclosure contained in filings by
REXI with the Securities and Exchange Commission ("SEC"),
including, without limitation, REXI’s most recent annual and quarterly
reports
filed
with
the
SEC.
REXI’s
SEC
filings
are
available
on
its
website
at
www.resourceamerica.com.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this presentation.
All subsequent written and oral forward-looking statements
attributable to REXI or any person acting on its behalf are expressly
qualified
in
their
entirety
by
the
cautionary
statements
contained
or
referred
to
in
this
document
and
the
related
presentation.
Except
to
the extent required by applicable law or regulation, REXI undertakes
no obligation to update these forward-looking statements to reflect
events or circumstances after the date of this presentation or to
reflect the occurrence of unanticipated events. This
presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any of the
securities described herein, nor shall there be any sale of these
securities in any state or jurisdiction in which such offer, solicitation or
sale
would
be
unlawful
prior
to
registration
or
qualification
under
the
securities
laws
of
any
such
state
or
jurisdiction.
A
registration
statement
relating
to
securities
offered
by
Resource
Real
Estate
Opportunity
REIT
II,
Inc.
was
declared
effective
by
the
SEC
February
6,
2014. A written prospectus relating to these securities may be
obtained by contacting Resource Securities, Inc., 2005 Market Street, 15th
Floor, Philadelphia, PA 19103.
Safe Harbor |
 Resource
America Overview Equity Market Capitalization:
Investment Professionals:
66
Office Locations:
New York, Philadelphia, London
Los Angeles, Denver, Singapore
Fully Diluted Shares:
Net Corporate Debt:
$0
3
Resource America, Inc., (NASDAQ: REXI) (the “Company”) is an asset
management company that specializes in real estate and credit
investments. The Company manages gross aggregate assets under management of
nearly $18 billion.
Resource America’s objective is to be best in class among asset managers in
the real estate and credit sectors as measured by returns to our
investors and the quality of the funds and businesses we manage. Most of
the senior management team has worked together for over 15 years. Resource America’s
investments emphasize consistent value and long-term returns with an income
orientation. $
209
million
1
22,027,000
2
1- Based on fully-diluted shares using 7/1/14 price; 2- As
of 3/31/14 |
 Assets Under
Management 4
Sector
Product
Gross AUM (in MM) as of 3/31/14
Real Estate Debt
Resource Capital Corp.
$ 1,269
Real Estate Equity
Opportunity REIT
701
$
Real Estate Funds
647
$ 1,348
Credit
CVC Credit Partners
10,028
$
ABS
4,223
$ 14,251
Other
Various
$ 924
Total
$ 17,792 |
 Real Estate
Debt * REXI earns a 1.5% fee based on equity capitalization. This
number includes preferred equity as of 6/10/14 5
The Company is the external manager of Resource Capital Corp. (NYSE:RSO), a
publicly traded commercial mortgage REIT. RSO has equity
capitalization of $1.02 billion* including a $1.27 billion real estate
debt portfolio. RSO has a powerful core platform and established management team in origination,
acquisition, asset management and securitization of real estate debt and
debt securities. The team focuses on originating transitional real
estate loans and managing commercial mortgage-backed securities. RSO
has consistently paid a cash dividend since inception in 2005. It raised
over $190 million of equity capitalization in 2013 and has already raised
$146 million so far this year.
Resource America earns a 1.5% base fee plus a 25% incentive fee over an 8%
return, along with expense reimbursements. |
 Real Estate
Equity The Company is the external manager of Resource Real Estate
Opportunity REIT (“Opp. REIT I”), a publicly registered
non-traded REIT, that was sold through our extensive broker-dealer channel. Opp. REIT I closed
fundraising with a total of $635 million. The registration statement filed by
Resource Real Estate Opportunity REIT II, Inc. (“Opp. REIT
II”), a newly formed publicly registered non-traded REIT, was deemed effective by the SEC
and launched in February 2014, to raise up to $1 billion, to be managed by
Resource America. Currently 36 Broker-Dealers with over 45,000
representatives have signed agreements to sell Resource Real Estate
Opportunity REIT II. Resource America earns a 2% acquisition fee, a 1% annual asset management fee,
4.5% of gross rental income property management fees, and an incentive of 15%
over a 7% hurdle. 8 Real Estate Partnerships that have invested in a total
of 36 properties with a carried value of $569 million 6
Joint Venture focused on distressed real estate with Varde, a privately held $7
billion investment management company located in Minneapolis, MN.
The JV has invested $168 million to date across 20 properties and currently
holds $18 million in assets across two properties.
Opportunity REIT
Real Estate Funds |
 Credit
CCP HAS RAISED $6.2 Billion
7
* As of 5/31/14
24 MONTHS
Over
the
last
two
years:
CCP has closed 9 CLO’s (8 in the US, 1 in Europe) with assets over $4.6
billion Completed a $450 million European Initial Public Offering and a
$150 million Secondary Offering for CVC Credit
Partners European Opportunities Limited Fund
Closed $917 million in Global Managed Accounts
Raised $120 million in additional capital in CVC Credit Opportunities Fund
The Company owns 33% of CVC Credit Partners L.P., (“CCP”) a
partnership jointly owned with CVC Capital Partners, one of the
world’s leading private equity and investment advisory firms. CCP is an independent
credit asset management and investment group focusing on sub-investment
grade corporate debt in the United States and Europe.
•
•
32 Vehicles (24 in the US, 8 in Europe)
Winner of the Creditflux Best CLO Manager Award for 2012 and 2014
$11.1 Billion in AUM ($7.7 Billion in the US, $3.4 Billion in Europe) Portfolio
Snapshot* |
 ABS / New Products
ABS
•
The Company manages 22 securitizations for institutional investors comprised of
Bank and Insurance Trust Preferred Securities, ABS and CMBS. The
group that manages these securitizations also manages a series of private
equity funds that invest exclusively in US banks. New
Products
•
The Company launched the Diversified Income Fund in Q2 2013, an alternative real
estate income mutual fund that invests across global securities, credit
and unlisted real estate funds. The target market for this product is
affluent investors, to which we are currently distributing Opp. REIT II,
although the Diversified Income fund will be able to market to a wider
audience given its mutual fund status. •
The Company launched its institutional real estate global securities business
with a joint venture with Channel Capital, an affiliate of an Australian
fund manager, Solaris Investment Management with several billion dollars
of institutional equity under management.
8 |
 All Systems In
Place High Quality Investment Platforms
Long-term Track Record
Robust Distribution Channels
Capital Invested in Solid Infrastructure
Strong and Experienced Team
9 |
 Right
Markets, Right Time •
This is a $105 billion equity market cap sector (Stanger, January
2014) •
The annual investment rate of $24 billion in 2013 was an 84% increase from 2012
and that number is expected to be much higher in the coming years.
(Stanger, January 2014) •
•
As of May 30, 2014 the US Mortgage REIT sector has a market cap of over $69
billion (NAREIT, May 2014) •
access to this capital (NAREIT Investment Performance by Property Sector and
Subsector, May 2014) •
The number of deals and players in this market has been relatively constant,
while the capital available has increased year over year and is
permanent •
The credit fundraising market place is tremendous and expanding rapidly
•
The Company has partnered with CVC Capital, one of the world’s leading
private equity and investment advisory firms, which offers us
introductions to large managed accounts •
Our ability to grow increases exponentially with this partnership and gives us
access to global markets 10
Credit
We are one of only 15 major players that actively accesses this capital and it
is long-term “sticky” money
Our core competencies are in markets that are huge and expanding - real
estate and credit products
YTD $7 billion was raised in the mortgage REIT space, and we are one of roughly
10 commercial players with Core
competencies and track record in managing and acquiring multifamily properties sets us apart from others
Market
Non-Traded
REIT
Market
Mortgage
REIT
Market |
 The Company
Objectives Currently acquiring assets for RRE Opportunity REIT I
Raising RRE Opportunity REIT II
Exploring and launching a new type of REIT asset class
Expanding the Interval Fund Platform for Alternative Investments
Growing Resource Capital Corp. through new originations and new platforms
Middle Market Lending
Residential Mortgages
11
Creating
value
now
for the
future |
 Strong
Company – Growth Business
Real Estate Equity Raised by Year
Successful Penetration of Fundraising Channels and Creation of New
Products
CAGR = 63%
12
0
100
200
300
400
500
600
700
2010
2011
2012
2013 |
 Real Estate
Business – Increased Equity
Generates Greater Fees
As Our AUM Has Grown, so have the Fees that REXI receives
* Actual through 3/31/14, projected through 12/31/14
CAGR = 34%
13
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2010
2011
2012
2013
2014*
Other
Real Estate Acquisition Fees
Incentive Management Fees
Base Management Fees
Real Estate Asset Management Fees |
 Adjusted Cash
Flow From Continuing Operations Equates to Shareholder Value
14
* Actual through 3/31/14, projected through 12/31/14
Range of
Guidance
-15.0
-10.0
-
5.0
0.0
5.0
10.0
15.0
20.0
25.0
2010
2011
2012
2013
2014*
Adjusted Cash from Operations |
 Incremental Fundraising Propels Exponential
Growth
15
Non
Traded
REIT
Growth
2% acquisition fee (80% margin)
1% asset management fee (60% margin)
Disposition fees, debt financing fees, broker dealer fees, property
management fees Outlook
Modest fundraising in 2014 with initiation of Opp. REIT II
Accelerated fundraising in 2015-2016 in Opp. REIT II
Fully invested Opp. REIT I will produce approximately $10 million in annual
asset management fees Beginning in 2015, modest incremental fundraising
from new REIT product should increase dollars raised by 25-50%
CVC
Growth
CLOs -
50 bps collateral management fee (35% margin)
Managed Accounts -70 bps management fee (35% margin) plus 15% incentive
above an 8% hurdle on certain accounts Outlook
Expect to add $3 billion in CLO products each year, along with $1 billion in
managed account products At March 31, 2014:
Legacy CLO assets under management of $8.5 billion with a w/a management fee of
47 bps Legacy managed account assets under management of $1.6 billion
with a w/a management fee of 54 bps RSO Growth
A 1.5% equity management fee (70% margin) plus 25% incentive above an 8%
hurdle Outlook
Expect to add between $50 -$175 million in new equity annually
At June 30, 2014, RSO’s equity base is approximately $ 940 million
We expect to more than double our pre-tax income over the next few
years Current run rate of $500 million invested per year should grow by
$200 - $250 million a year Fundraising for Opp. REIT II is expected to hit $1 billion over the next 2 -
3 years Expect to achieve meaningful incentives for 2015 and beyond between $2 - $4
million Continuing to invest funds raised from Opp. REIT I ($100 - $125 million per
quarter) |
 Tipping
Point Fundraising is at a record pace in our core asset management
businesses We have developed these major platforms and solid distribution
channels Investments in infrastructure have now taken place in our
platforms: Greatly expanded the wholesale distribution force for our
non-traded REIT Channel Acquisition of property management platform
with 500 professionals 16
We are in huge multi-billion dollar market places with access to lots of
perpetual and “sticky” capital that produce fees for long
periods of time We
have tremendous operating leverage across all of our businesses, additional funds raised produce
incremental revenues with higher margins
Margins are increasing and the fees the businesses generate are increasing as
well through recurring asset management fees, property management fees,
acquisition fees, disposition fees, exit and performance fees Invested in
significantly experienced professionals from Goldman Sachs to build out our credit
team and platform
|
 Balance Sheet
is Strong •
Simplified the businesses
•
Significantly reduced debt, Effectively deleveraged the Company
•
Liquidity has increased
17
By Year
YE
YE
YE
YE
Q1
12/31/2010
12/31/2011
12/31/2012
12/31/2013
3/31/2014
Cash per financials
14,530
12,803
11,899
19,853
17,210
RSO stock
18,070
14,161
14,956
16,969
15,939
Potential Liquidation of Security Positions
2,433
2,981
8,547
7,333
7,175
Potential Liquidation of Fund Interests
4,594
3,577
3,847
5,289
4,883
Total adjusted liquidity
39,627
33,522
39,249
49,444
45,207
Senior Notes
18,820
10,000
10,000
10,000
10,000
TD Facility
12,793
5,303
-
-
-
Republic/Sovereign
-
-
-
-
-
Total debt
31,613
15,303
10,000
10,000
10,000
Cash and Liquidity Net of Debt
8,014
18,219
29,249
39,444
35,207
Corporate Credit Facility Availability
14,497
|
 What will we
do with this excess cash? •
More dividends?
•
Continue to increase
dividends?
18
•
Continue to buy
back more stock?
•
Invest in
businesses?
USE OF
CASH |