CST: 26/07/2016 22:39:30   

Resource America, Inc. Reports Operating Results for the Fourth Quarter and Year Ended December 31, 2015

147 Days ago

PHILADELPHIA, PA--(Marketwired - Mar 1, 2016) - Resource America, Inc. (NASDAQ: REXI)

Fourth Quarter 2015 Highlights

  • Adjusted net income attributable to common shareholders of $4.2 million or $0.20 per common share-diluted (see Schedule I)
  • Raised a record $196.0 million for Resource Real Estate Opportunity REIT II, Inc.
  • Book value per common share of $7.09
  • Repurchased 866,389 shares at an average price of $5.67 per share 

Fourth Quarter 2015 Results

Resource America, Inc. (NASDAQ: REXI) (the "Company")  reported adjusted net income attributable to common shareholders, a non-GAAP measure, of $4.2 million, or $0.20 per common share-diluted, and $10.6 million, or $0.47 per common share-diluted, for the three months and year ended December 31, 2015, respectively, as compared to adjusted net income attributable to common shareholders of $2.1 million, or $0.09 per common share-diluted, and $12.1 million, or $0.54 per common share-diluted, for the three months and year ended December 31, 2014, respectively. A reconciliation of the Company's reported GAAP net income attributable to common shareholders to adjusted net income attributable to common shareholders, a non-GAAP measure, is included as Schedule I to this release.

The Company reported GAAP net income attributable to common shareholders of $3.7 million, or $0.17 per common share-diluted, and $5.3 million, or $0.24 per common share-diluted, for the three months and year ended December 31, 2015, respectively, as compared to GAAP net income attributable to common shareholders of $2.2 million, or $0.09 per common share-diluted, and $9.0 million, or $0.40 per common share-diluted, for the three months and year ended December 31, 2014.

Assets Under Management

The following table details the Company's assets under management by operating segment which, in gross, increased by $1.5 billion (8%) from December 31, 2014 to 2015 (in billions):

   
  December 31,
  2015   2014
Financial fund management $ 16.8   $ 16.1
Real estate   4.1     3.4
Commercial finance   0.8     0.7
  $ 21.7   $ 20.2
           
  Net assets under management (1) $ 9.4   $ 9.7
   
(1) Net assets under management represents the proportionate share of assets managed by the Company after reflecting joint venture arrangements. As of December 31, 2015 and 2014, net assets reflect the Company's 24% and 33% interests, respectively, in its CVC Credit Partners joint venture.
   

A description of how the Company calculates assets under management is set forth in Item 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2014.

The consolidated financial statements included herein reflect the deconsolidation of Resource Capital Corp. ("RSO"), a publicly-traded REIT managed by the Company, for all prior periods presented, in connection with the Company's election to early adopt the latest accounting guidance regarding consolidations.

On January 29, 2016, the Company announced that it would be evaluating its current strategic position and seeking to identify and evaluate strategic and financial alternatives for the Company to enhance shareholder value, and that it had engaged Evercore to advise the Company. The Company is in the process of conducting this evaluation; however, the Company has not set a definitive timetable for completion of its evaluation, and there can be no assurances that the process will result in any transaction being announced or completed. The Company does not intend to provide updates or make any further comment until the outcome of the process is determined or until there are significant developments.

Highlights for the Fourth Quarter and Year Ended December 31, 2015 and Recent Developments

REAL ESTATE ASSET MANAGEMENT:

Equity Asset Management

Resource Real Estate Opportunity REIT, Inc. ("Opportunity REIT I"), a public non-traded real estate investment trust ("REIT") managed by the Company, which specializes in acquiring and managing distressed real estate assets, had the following highlights for the year ended December 31, 2015:

  • Increased total assets to $1.1 billion at December 31, 2015, an increase of 12%, from $978.4 million at December 31, 2014.

  • Acquired $256.4 million of assets, placed or assumed financing of $139.3 million and disposed of $87.7 million of multifamily assets.

Resource Real Estate Opportunity REIT II, Inc. ("Opportunity REIT II"), a public non-traded REIT managed by the Company, which specializes in acquiring multifamily rental properties and selected loans, had the following highlights:

  • Raised a record $196.0 million during the three months ended December 31, 2015 and completed fundraising in February 2016 with a total equity capital raise of $556.0 million.

  • Increased total assets to $596.4 million at December 31, 2015, an increase of 634%, from $81.2 million at December 31, 2014.

  • Acquired $170.7 million of assets and placed $42.5 million of financing during the three months ended December 31, 2015. Acquisitions and financings totaled $372.8 million and $116.2 million, respectively, for the year ended December 31, 2015.

Resource Real Estate Diversified Income Fund, a public closed-end real estate focused investment fund managed by the Company, has raised $100.4 million since inception, including $65.2 million during the year ended December 31, 2015.

On February 16, 2016, Resource Innovation Office REIT, Inc., a company-sponsored REIT that will focus on acquiring office buildings, broke escrow. Resource Innovation Office Advisor, LLC, a subsidiary of Resource Real Estate, Inc, which is a wholly-owned subsidiary of the Company, will be the external manager.

Resource Apartment REIT III, Inc. filed a registration statement with the U.S. Securities and Exchange Commission on November 2, 2015 to raise up to $1.0 billion.

Debt Asset Management

RSO originated $255.1 million and $744.2 million in new commercial real estate loans during the three months and year ended December 31, 2015.

The following additional highlights contributed to our real estate asset management operations:

  • The Company's real estate operating segment increased its gross assets under management at December 31, 2015 to $4.1 billion, an increase of $700.3 million, or 21%, from December 31, 2014.

  • Real estate revenues increased 79% and 44% to $24.9 million and $79.1 million for the three months and year ended December 31, 2015, respectively, as compared to $13.8 million and $54.9 million for the three months and year ended December 31, 2014.

FINANCIAL FUND MANAGEMENT:

Credit Asset Management

CVC Credit Partners, L.P. ("CCP"), the Company's global joint venture, closed Apidos CLO XXIII, Ltd. in January 2016. CCP has now closed CLOs issuing notes with a total par value of $8.8 billion. At December 31, 2015, the Company had a 24% interest in this joint venture.

The following additional highlight contributed to the Company's financial fund asset management operations:

  • The Company's financial fund management operating segment increased its gross assets under management at December 31, 2015 to $16.8 billion, an increase of $700.0 million, or 4%, from December 31, 2014.

CORPORATE/OTHER:

Share Repurchases

  • On August 13, 2015, the Company's Board of Directors authorized the repurchase of $25.0 million of its common stock; $7.8 million remains available for repurchase under this plan.

  • The Company repurchased 866,389 and 2.7 million of its shares during the fourth quarter and year ended December 31, 2015, respectively, at average prices of $5.67 and $7.35 per share. The shares repurchased during 2015 represented approximately 12% of outstanding shares.

Dividends

  • The Company's Board of Directors authorized a cash dividend of $0.06 per share on the Company's common stock which was paid on January 29, 2016 to holders of record as of the close of business on January 15, 2016. 

  • RSO's Board of Directors declared a cash dividend of $0.42 per common share for its three months ended December 31, 2015.

Resource America, Inc. is a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities for its own account, for its joint ventures, and for outside investors in the real estate, financial fund management and commercial finance sectors.

For more information, please visit our website at www.resourceamerica.com or contact investor relations at pkamdar@resourceamerica.com.

Statements made in this release include forward-looking statements, which involve substantial risks and uncertainties. The Company's actual results, performance or achievements could differ materially from those expressed or implied in this release and its other reports filed with the Securities and Exchange Commission, or SEC. For information pertaining to risks relating to these forward-looking statements, reference is made to the section "Risk Factors" contained in Item 1A of the Company's Annual Report on Form 10-K and in other of its public filings with the SEC. The Company undertakes no obligation to update or revise any forward-looking statements to reflect new or changing information or events except as may be required by law.

A registration statement relating to securities offered by Innovation Office REIT was declared effective by the SEC on October 5, 2015. A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.

A registration statement relating to securities offered by Opportunity REIT II was declared effective by the SEC on February 6, 2014. A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.

A registration statement relating to securities offered by Diversified Income Fund was declared effective by the SEC on November 3, 2013. A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.

This press release shall 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.

The remainder of this release contains the Company's unaudited consolidated balance sheets, consolidated statements of operations, and reconciliation of GAAP net income (loss) attributable to common shareholders to adjusted net income attributable to common shareholders.

   
RESOURCE AMERICA, INC  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share data)  
(unaudited)  
   
  December 31,  
  2015     2014  
               
ASSETS              
  Cash $ 24,132     $ 33,947  
  Restricted cash   937       725  
  Receivables   3,228       1,414  
  Loans and receivables from managed entities and related parties, net   26,667       32,745  
  Investments in real estate, net   16,022       17,097  
  Investment securities, at fair value   45,672       41,383  
  Investments in unconsolidated loan manager   32,616       39,655  
  Investments in unconsolidated entities   17,553       16,024  
  Property and equipment, net   5,371       5,063  
  Deferred tax assets, net   29,264       32,818  
  Other assets   9,733       5,556  
    Total assets $ 211,195     $ 226,427  
               
LIABILITIES AND EQUITY              
Liabilities:              
  Accrued expenses and other liabilities $ 27,184     $ 22,474  
  Payables to managed entities and related parties   3,145       3,124  
  Borrowings   20,747       20,970  
      Total liabilities   51,076       46,568  
               
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; 34,973,987 and 34,489,568 shares issued (including nonvested restricted stock of 1,095,238 and 833,082), respectively   339       335  
  Additional paid-in capital   311,491       308,134  
  Accumulated deficit   (31,683 )     (32,051 )
  Treasury stock, at cost; 14,460,024 and 11,764,417 shares, respectively   (139,858 )     (120,182 )
  Accumulated other comprehensive income (loss)   (2,526 )     3,025  
    Total stockholders' equity   137,763       159,261  
  Noncontrolling interests   22,356       20,598  
    Total equity   160,119       179,859  
    Total liabilities and equity $ 211,195     $ 226,427  
                   
                   
                   
RESOURCE AMERICA, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share data)  
(unaudited)  
   
  Three Months Ended     Years Ended  
  December 31,     December 31,  
  2015     2014     2015     2014  
REVENUES:                              
Real estate $ 24,853     $ 13,849     $ 79,130     $ 54,861  
Financial fund management   2,694       7,627       20,411       29,118  
Commercial finance   248       (6 )     314       (164 )
    27,795       21,470       99,855       83,815  
COSTS AND EXPENSES:                              
Real estate   12,499       10,047       47,303       37,411  
Financial fund management   3,923       4,844       13,687       14,902  
Commercial finance   505       396       1,976       979  
General and administrative   4,294       3,041       15,825       11,118  
Provision for credit losses   2       (284 )     280       3,058  
Depreciation and amortization   485       450       1,961       1,819  
    21,708       18,494       81,032       69,287  
OPERATING INCOME (LOSS)   6,087       2,976       18,823       14,528  
                               
OTHER INCOME (EXPENSE):                              
Gain (loss) on sale of investment securities, net   --       6       --       445  
Other-than-temporary impairment on investments   (180 )     --       (4,677 )     --  
Interest expense   (449 )     (458 )     (1,775 )     (1,905 )
Other income, net   329       553       1,718       2,532  
    (300 )     101       (4,734 )     1,072  
Income (loss) from continuing operations before taxes   5,787       3,077       14,089       15,600  
Income tax provision (benefit)   3,289       862       6,745       5,853  
Net income (loss)   2,498       2,215       7,344       9,747  
Net (income) loss attributable to noncontrolling interest   1,188       (56 )     (2,044 )     (729 )
Net income (loss) attributable to common shareholders $ 3,686     $ 2,159     $ 5,300     $ 9,018  
                               
Basic earnings per share:                              
Net income (loss) $ 0.18     $ 0.09     $ 0.24     $ 0.43  
Weighted average shares outstanding   20,998       22,817       22,218       21,148  
                               
Diluted earnings per share:                              
Net income (loss) $ 0.17     $ 0.09     $ 0.24     $ 0.40  
Weighted average shares outstanding   21,272       23,094       22,489       22,371  
                               

Schedule I

 
RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS TO
ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS(1)
(in thousands, except per share data)
(unaudited)
 
 
  Three Months Ended     Years Ended
  December 31,     December 31,
  2015   2014     2015   2014
                         
Net income (loss) attributable to common shareholders - GAAP $ 3,686   $ 2,159     $ 5,300   $ 9,018
                         
Adjustments, net of tax:                        
Impairment of investment in unconsolidated loan manager   --     --       2,539     --
Loss attributable to commercial finance   123     81       1,078     2,661
Deferred tax provision (benefit)   398     (105 )     1,686     380
Adjusted net income (loss) attributable to common shareholders $ 4,207   $ 2,135     $ 10,603   $ 12,059
                         
Weighted average diluted shares outstanding   21,272     23,094       22,489     22,371
                         
Adjusted net income attributable to common shareholders per common per share-diluted $ 0.20   $ 0.09     $ 0.47   $ 0.54
                         
(1) Adjusted net income attributable to common shareholders presents the Company's operations without the effect of the impairment of its investment in unconsolidated loan manager, its commercial finance operations and deferred tax provision (benefit). The Company believes that this provides useful information to investors since it allows investors to evaluate the Company's progress in both its real estate and financial fund management segments for the three months and year ended December 31, 2015 and 2014 separately from its commercial finance operations and deferred tax provision (benefit). Adjusted net income attributable to common shareholders should not be considered as an alternative to net income (loss) attributable to common shareholders (computed in accordance with GAAP). Instead, adjusted net income attributable to common shareholders should be reviewed in connection with net income (loss) attributable to common shareholders in the Company's consolidated financial statements to help analyze how the Company's business is performing.
   

Contact:
Thomas C. Elliott
Chief Financial Officer
Resource America, Inc.
One Crescent Drive, Suite 203
Philadelphia, PA 19112
(215) 546-5005; (215) 640-6357 (fax)