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Resource Capital Corp. Reports Results for Three Months Ended March 31, 2018 and Announces Name Change

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NEW YORK, May 03, 2018 (GLOBE NEWSWIRE) -- Resource Capital Corp. (NYSE:RSO) ("RSO" or the "Company") reports results for the three months ended March 31, 2018.

Significant Items and Highlights

  • GAAP net loss allocable to common shares of $(0.40) per share-diluted for the three months ended March 31, 2018.

  • Core Earnings were $(0.28) per common share-diluted, and were $0.03 per common share-diluted when adjusted for the non-recurring charges relating to the redemption of the Company's 8.25% Series B Cumulative Redeemable Preferred Stock ("Series B Preferred Stock") and the pending settlement of a securities litigation (see Schedule I).

  • Effective at 5:00 p.m. (EDT) on May 25, 2018, RSO will change its name to "Exantas Capital Corp."

  • RSO's board of directors anticipates that it will declare a cash dividend of $0.10 per share on its common stock for the second quarter of 2018, which is a 100% increase over the first quarter of 2018 amount.

  • RSO has monetized $400.6 million of the investments that were included in management's previously communicated strategic plan (the "Plan") (see Schedule III). This includes $13.9 million of assets liquidated during the three months ended March 31, 2018 and $22.7 million of assets liquidated in April and May 2018.

  • RSO originated $146.3 million of new commercial real estate ("CRE") loans during the three months ended March 31, 2018 (see Schedule IV).

  • In April 2018, RSO entered into an additional CRE term financing facility, increasing its borrowing capacity to $900.0 million from $650.0 million.

  • RSO redeemed all of its outstanding 8.50% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred Stock") and Series B Preferred Stock.

  • Common stock cash dividend of $0.05 per share for the three months ended March 31, 2018.

  • Book value of $13.92 per common share at March 31, 2018, as compared to $14.46 per common share at December 31, 2017.

Three Months Ended March 31, 2018 Results

  • GAAP net loss allocable to common shares of $12.6 million, or $(0.40) per share-diluted, for the three months ended March 31, 2018 as compared to GAAP net income allocable to common shares of $2.7 million, or $0.09 per share-diluted, for the three months ended March 31, 2017. GAAP net loss allocable to common shares for the three months ended March 31, 2018 includes a $4.5 million decline in the fair value of an asset held for sale based on independent appraisals.

  • Core Earnings were $(8.6) million, or $(0.28) per common share-diluted, for the three months ended March 31, 2018, and were $1.0 million, or $0.03 per common share-diluted, when adjusted for the non-recurring charges relating to the redemption of the Company's Series B Preferred Stock and the pending settlement of a securities litigation.

  • GAAP net loss allocable to common shares and Core Earnings for the three months ended March 31, 2018 include a charge of $7.5 million, or $(0.24) per share-diluted, related to the March 2018 redemption of all remaining outstanding shares of the Company's Series B Preferred Stock. The redemption charge represents the difference between the carrying value and the redemption price of the redeemed Series B Preferred Stock. Core Earnings for the three months ended March 31, 2018 additionally include a charge of $2.2 million, or $(0.07) per common share-diluted, related to the pending settlement of a securities litigation.

Additional Items

Commercial Real Estate

  • Substantially all of RSO's $1.4 billion CRE loan portfolio comprised floating rate senior whole loans at March 31, 2018.

  • RSO's CRE floating rate whole loan portfolio had a weighted average spread of 4.65% over the one-month London Interbank Offered Rate ("LIBOR") of 1.88% at March 31, 2018.

The following table summarizes RSO's CRE loan activities and fundings of previous commitments, at par, for the three and twelve months ended March 31, 2018 (in millions, except percentages and amounts in footnotes):

  Three Months
Ended
March 31, 2018
  Twelve Months
Ended
March 31, 2018
New CRE loan commitments $ 127.1     $ 598.5  
New CRE preferred equity investment 19.2     19.2  
Total CRE loan commitments and investments 146.3     617.7  
Payoffs and paydowns (1)(2) (51.5 )   (500.3 )
Previous commitments funded 10.5     35.8  
New unfunded loan commitments (13.6 )   (70.1 )
Net CRE loans funded $ 91.7     $ 83.1  
       
Weighted average one-month LIBOR floor on new originations (3) 1.37 %   1.13 %
Weighted average spread above one-month LIBOR (3) 3.94 %   4.28 %
Weighted average unlevered yield, including amortization of origination fees 5.79 %   5.76 %
           


(1)   CRE loan payoffs and extensions resulted in $370,000 and $1.2 million of exit and extension fees during the three and twelve months ended March 31, 2018, respectively.
(2)   Activity does not include legacy CRE loans classified as assets held for sale.
(3)   Applicable to new CRE whole loans funded, excluding one CRE whole loan with an 8.00% fixed interest rate.
     

Commercial Mortgage-Backed Securities

RSO's commercial mortgage-backed securities ("CMBS") portfolio had a carrying value of $250.7 million and a weighted average coupon of 4.36% at March 31, 2018.

The following table summarizes RSO's CMBS activities, at face value, for the three and twelve months ended March 31, 2018 (in millions, except percentages):

           
  Three Months
Ended
March 31, 2018
    Twelve Months
Ended
March 31, 2018
 
           
CMBS acquisitions $ 44.3       $ 256.2    
Sales           (7.4 )  
Principal paydowns   (3.4 )       (50.5 )  
CMBS acquisitions, net $ 40.9       $ 198.3    
                   
Weighted average coupon at March 31, 2018   3.88 %       4.14 %  
                   

Commercial Real Estate Loans Term Facility

  • In April 2018, RSO entered into a $250.0 million master repurchase agreement with Barclays Bank PLC to finance CRE loan originations. The facility matures in April 2021, subject to certain one-year extension options. This facility increases RSO's financing capacity to $900.0 million from $650.0 million.

Discontinued Operations

  • Pursuant to the Plan, the assets and liabilities of Primary Capital Mortgage, LLC ("PCM") and RSO's middle market lending segment, NEW NP, LLC, were reclassified to held for sale during the fourth quarter of 2016 and are reported as discontinued operations on the consolidated statements of operations.

  • In the first quarter of 2018, PCM sold its remaining loans held for sale generating total cash proceeds of $1.9 million. PCM recognized a net loss of $539,000 for the three months ended March 31, 2018.

  • In the first quarter of 2018, NEW NP, LLC sold its remaining syndicated middle market loans generating total proceeds of $27.6 million, of which $12.7 million had been received in cash as of March 31, 2018 and the balance was received in May 2018.

  • At March 31, 2018, the one remaining directly originated middle market loan, with a carrying value of $2.0 million, was in default. The middle market portfolio generated net income of $819,000 for the three months ended March 31, 2018, including a $216,000 net realized gain on the syndicated middle market loan sales.

Liquidity

  • At April 30, 2018, RSO's available liquidity consisted of three primary sources:

     •  unrestricted cash and cash equivalents of $67.1 million;

     •  approximately $87.0 million of available liquidity from the financing of unlevered CRE and CMBS positions; and

     •  $396.2 million available under three term financing facilities to finance CRE loans.

Common Stock Book Value and Total Stockholders' Equity

The following table reconciles RSO's common stock book value from December 31, 2017 to March 31, 2018 (in thousands, except per share data and amounts in footnotes):

         
    Total Amount   Per Share
Amount
Common stock book value at December 31, 2017 (1)   $ 447,634     $ 14.46  
Net loss allocable to common shares   (12,582 )   (0.40 )
Change in other comprehensive income:        
Available-for-sale securities   (1,292 )   (0.04 )
Derivatives   1,149     0.03  
Common stock dividends  
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