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Resource Capital Corp. Reports Results for Three and Six Months Ended June 30, 2014

NEW YORK, NY -- (Marketwired) -- 08/05/14 -- Resource Capital Corp. (NYSE: RSO)

Highlights

  • Adjusted Funds from Operations ("AFFO") of $0.19 and $0.38 per share-diluted (see Schedule I).

  • Originated $214.0 million in new CRE loans during the three months ended June 30, 2014, with $180.7 million funded. Originated $330.7 million in new CRE loans during the six months ended June 30, 2014, with $288.9 million funded.

  • GAAP net income allocable to common shares of $0.11 and $0.23 per share-diluted.

  • Closed a $354 million commercial securitization at a weighted average cost of LIBOR + 129 bps.

  • Common stock cash dividend of $0.20 and $0.40 per share.

Resource Capital Corp. (NYSE: RSO) ("RSO" or the "Company"), a real estate investment trust, or REIT, whose investment strategy focuses on commercial real estate assets, commercial mortgage-backed securities ("CMBS"), commercial finance assets and other investments, reported results for the three and six months ended June 30, 2014.

  • AFFO for the three and six months ended June 30, 2014 was $24.0 million, or $0.19 per share-diluted and $49.0 million, or $0.38 per share-diluted, respectively, as compared to $19.6 million, or $0.16 per share-diluted and $40.6 million, or $0.36 per share-diluted for the three and six months ended June 30, 2013, respectively. A reconciliation of GAAP net income to AFFO is set forth in Schedule I of this release.

  • GAAP net income allocable to common shares for the three and six months ended June 30, 2014 was $14.7 million, or $0.11 per share-diluted and $29.8 million, or $0.23 per share-diluted, respectively, as compared to $6.5 million, or $0.05 per share-diluted and $18.1 million, or $0.16 per share-diluted for the three and six months ended June 30, 2013, respectively.

Jonathan Cohen, CEO and President of Resource Capital Corp., commented, "Our Commercial Real Estate loan originations are growing tremendously. This should benefit the organic growth of our company. Our CRE loan portfolio reached $1.0 billion of book value for the first time during the second quarter, and our success in securitizing those loans lets us continue to grow in an accretive way."

Additional highlights:
Commercial Real Estate

  • CRE loan portfolio is comprised of approximately 92% senior whole loans as of June 30, 2014, as compared to 88% a year ago.

  • RSO closed and funded $464.9 million of new whole loans in the last 12 months with a weighted average yield of 5.80%, including origination fees. In addition, RSO funded $19.2 million of previous loan commitments on existing loans.

  • GAAP book value of CRE loans held for investment has reached a milestone balance of $1.0 billion.

The following table summarizes RSO's CRE loan activities and fundings of previous commitments, at par, for the three, six and 12 months ended June 30, 2014 (in millions, except percentages):


                             Three      Six       12     Floating
                            Months    Months    Months   Weighted  Weighted
                             Ended     Ended     Ended    Average   Average
                           June 30,  June 30,  June 30,   Spread     Fixed
                              2014      2014      2014    (2)(3)     Rate
                           --------  --------  --------  --------  --------
New whole loans funded
 (1)(4)                    $  181.0  $  292.5  $  484.1      4.90%       --
New mezzanine loan funded       3.0       3.0       3.0        --     16.00%
Payoffs (5)                   (58.1)    (80.3)   (123.7)
Sales                            --        --        --
Principal paydowns             (0.9)     (1.9)    (15.0)
                           --------  --------  --------
Loans, net                 $  125.0  $  213.3  $  348.4
                           ========  ========  ========

(1) New whole loan production does not include unfunded commitments on whole
    loans of $33.3 million which brings total origination of commercial real
    estate whole loans to $214.0 million during the three months ended June
    30, 2014.
(2) Represents the weighted average rate above the one-month London
    Interbank Offered Rate ("LIBOR") on loans whose interest rate is based
    on LIBOR as of June 30, 2014. Of these loans, $270.9 million have LIBOR
    floors with a weighted average floor of 0.48%.
(3) Reflects rates on RSO's portfolio balance as of June 30, 2014.
(4) Whole loan production includes the funding of previous commitments of
    $3.3 million for the three months, $6.9 million for the six months and
    $19.2 million for the twelve months ended June 30, 2014, respectively.
(5) CRE loan payoffs and extensions resulted in $2.0 million in extension
    and exit fees during the three months ended June 30, 2014.

  • On July 30, 2014, RSO closed a $354 million CLO backed by self-originated commercial mortgage loans - its second CLO deal in an eight-month period. The CLO issued $235.3 million of non-recourse, floating-rate notes at a weighted average cost of LIBOR + 129 basis points. RSO retained the subordinate notes and the preferred shares in the transaction.

CMBS

  • During the six months ended June 30, 2014, RSO purchased $53.2 million par value of CMBS which were partially financed by 30-day repurchase contracts with a repurchase value of $37.3 million. In addition, RSO purchased $4.3 million, par value, of CMBS, which were financed by RSO's Wells Fargo repurchase facility and were AAA rated by at least one rating agency.

  • RSO sold $87.2 million, par value, of CMBS, which improved in value by $2.0 million during the quarter.

Commercial Finance

The following table summarizes RSO's middle market lending portfolio loan activities and fundings of previous commitments, at par, for the three, six, and 12 months ended June 30, 2014 (in millions, except percentages):


                              Six
                   Three    Months     12                Weighted
                  Months     Ended   Months   Weighted   Average
                   Ended     June    Ended     Average    All-in   Weighted
                  June 30,    30,   June 30,   Spread     Rate      Average
                    2014     2014     2014     (1)(2)      (2)       Yield
                 ---------  ------  --------  --------  ---------  --------
Middle Market
 loan production
 (3)             $    77.7  $110.1  $  160.3      7.16%      8.20%     9.04%
Sales                 (5.1)  (11.6)    (16.7)
Principal
 paydowns             (5.1)   (7.2)     (7.9)

                 ---------  ------  --------
Loans, net       $    67.5  $ 91.3  $  135.7
                 =========  ======  ========

(1) Represents the weighted average rate above the one-month and three-month
    LIBOR on loans whose interest rate is based on LIBOR as of June 30,
    2014. Of these loans, $120.9 million have LIBOR floors with a weighted
    average floor of 1.02%.
(2) Reflects rates on RSO's portfolio balance as of June 30, 2014.
(3) Loan production does not include $36.1 million of unfunded commitments
    as of June 30, 2014.

  • RSO's bank loan portfolio, including asset-backed securities ("ABS"), corporate bonds, certain loans held for sale and middle market loans, at the end of the second quarter of 2014 was $757.5 million, at amortized cost, with a weighted-average spread of one-month and three-month LIBOR plus 3.81% at June 30, 2014. RSO's bank loan portfolio was substantially match-funded through four CLO issuances.

  • RSO, through its subsidiary Resource Capital Asset Management, earned $2.8 million of net fees during the six months ended June 30, 2014.

Corporate

  • RSO issued 4.8 million shares of its 8.625% Series C Cumulative Redeemable Preferred Stock, at a price of $24.2125 per share with a liquidation preference of $25.00 per share, for net proceeds of $116.2 million.

  • Total revenues increased by $13.0 million, or 60%, and $14.3 million, or 27%, as compared to revenues for the three and six months ended June 30, 2013, respectively.

Investment Portfolio

The table below summarizes the amortized cost and net carrying amount of RSO's investment portfolio as of June 30, 2014, classified by interest rate and by asset type. The following table includes both (i) the amortized cost of RSO's investment portfolio and the related dollar price, which is computed by dividing amortized cost by par amount, and (ii) the net carrying amount of RSO's investment portfolio and the related dollar price, which is computed by dividing the net carrying amount by par amount (in thousands, except percentages):


                                                             Net
                                                          carrying
                                                           amount
                                          Net               less    Dollar
                    Amortized Dollar   carrying  Dollar   amortized  price
                      cost     price     amount   price     cost      (4)
                   ---------- ------  ---------- ------  ---------- ------
   June 30, 2014
   Floating rate
RMBS, trading      $    1,901  20.61% $      332   3.60% $  (1,569) (17.01)%
CMBS-private
 placement             26,644  91.86%     16,793  57.89%    (9,851) (33.96)%
Structured notes -
 trading                8,056  34.62%      8,619  37.04%        563   2.42%
Structured notes -
 available-for-
 sale                  23,203  94.11%     24,655 100.00%      1,452   5.89%
RMBS - available-
 for-sale              30,647 100.00%     30,647 100.00%         --     --%
Mezzanine loans        12,480  99.17%     12,422  98.70%       (58)  (0.46)%
Whole loans (1)       954,746  99.50%    949,292  98.93%    (5,454)  (0.57)%
Bank loans (2)        706,581  99.64%    705,912  99.55%      (669)  (0.09)%
Loans held for
 sale (3)              15,427  98.14%     15,427  98.14%         --     --%
ABS Securities         32,145 114.26%     33,360 118.58%      1,215   4.32%
Corporate Bonds         3,360  97.25%      3,467 100.35%        107   3.10%
                   ----------         ----------         ----------
 Total floating
  rate              1,815,190  98.36%  1,800,926  97.59%   (14,264)  (0.77)%
                   ----------         ----------         ----------
    Fixed rate
CMBS-private
 placement            149,339  79.82%    155,581  83.16%      6,242   3.34%
CMBS-linked
 transactions          12,901 104.67%     13,676 110.96%        775   6.29%
B notes (1)            16,138  99.60%     16,062  99.13%       (76)  (0.47)%
Mezzanine loans
 (1)                   54,780  99.99%     54,524  99.52%      (256)  (0.47)%
Residential
 mortgage loans         2,470 100.00%      2,444  98.95%       (26)  (1.05)%
Loans held for
 sale (3)              24,859 100.00%     24,859 100.00%         --     --%
Loans receivable-
 related party          5,451 100.00%      4,751  87.16%      (700) (12.84)%
                   ----------         ----------         ----------
Total fixed rate      265,938  87.71%    271,897  89.68%      5,959   1.97%
                   ----------         ----------         ----------
    Other (non-
 interest bearing)
Property
 available-for-
 sale                  29,509 100.00%     29,509 100.00%         --     --%
Investment in
 unconsolidated
 entities              60,480 100.00%     60,480 100.00%         --     --%
                   ----------         ----------         ----------
 Total other           89,989 100.00%     89,989 100.00%         --     --%
                   ----------         ----------         ----------
  Grand total      $2,171,117  96.99% $2,162,812  96.62% $  (8,305)  (0.37)%
                   ==========         ==========         ==========

(1) Net carrying amount includes an allowance for loan losses of $5.8
    million at June 30, 2014, allocated as follows: B notes $76,000,
    mezzanine loans $314,000 and whole loans $5.5 million.
(2) Net carrying amount includes allowance for loan losses of $669,000 at
    June 30, 2014.
(3) Loans held for sale are carried at the lower of cost or fair market
    value. Amortized cost is equal to fair value.
(4) Differences in percentages are due to rounding.

Liquidity

At July 31, 2014, after paying our second quarter 2014 common and preferred stock dividends, our liquidity is derived from three primary sources:

  • unrestricted cash and cash equivalents of $156.3 million, restricted cash of $500,000 in margin call accounts and $2.0 million in the form of real estate escrows, reserves and deposits;

  • capital available for reinvestment in two of our securitizations of $3.9 million, all of which is designated to finance future funding commitments on CRE loans; and

  • loan principal repayments of $59.6 million that will pay down outstanding CLO note balances as well as interest collections of $4.5 million.

In addition, RSO has funds available through three term financing facilities to finance the origination of CRE loans of $250 million and $200 million, respectively, and to finance the purchase of CMBS of $67.8 million.

Capital Allocation

As of June 30, 2014, RSO had allocated its invested equity capital among its targeted asset classes as follows: 68% in CRE assets, 31% in commercial finance assets and 1% in other investments.

Supplemental Information

The following schedules of reconciliations or supplemental information as of June 30, 2014 are included at the end of this release:

  • Schedule I - Reconciliation of GAAP Net Income to Funds from Operations ("FFO") and AFFO.
  • Schedule II - Book Value Allocable to Common Shareholders Rollforward.
  • Schedule III - Securitizations - Distributions and Coverage Test Summary.
  • Supplemental Information regarding loan investment statistics, CRE loans and bank loans.

About Resource Capital Corp.

RSO is a real estate investment trust that is primarily focused on originating, holding and managing commercial mortgage loans and other commercial real estate-related debt and equity investments. RSO also makes other commercial finance investments.

RSO is externally managed by Resource Capital Manager, Inc., an indirect wholly-owned subsidiary of Resource America, Inc. (NASDAQ: REXI), an asset management company that specializes in real estate and credit investments.

For more information, please visit RSO's website at www.resourcecapitalcorp.com or contact investor relations at [email protected].

Safe Harbor Statement

Statements made in this release may include forward-looking statements, which involve substantial risks and uncertainties. RSO's actual results, performance or achievements could differ materially from those expressed or implied in this release. The risks and uncertainties associated with forward-looking statements contained in this release include those related to:

  • fluctuations in interest rates and related hedging activities;
  • the availability of debt and equity capital to acquire and finance investments;
  • defaults or bankruptcies by borrowers on RSO's loans or on loans underlying its investments;
  • adverse market trends which have affected and may continue to affect the value of real estate and other assets underlying RSO's investments;
  • increases in financing or administrative costs; and
  • general business and economic conditions that have impaired and may continue to impair the credit quality of borrowers and RSO's ability to originate loans.

For further information concerning these and other risks pertaining to the forward-looking statements contained in this release, and to the general risks to which RSO is subject, see Item 1A, "Risk Factors" included in its Annual Report on Form 10-K and the risks expressed in other of its public filings with the Securities and Exchange Commission.

RSO cautions you not to place undue reliance on any forward-looking statements contained in this release, which speak only as of the date of this release. All subsequent written and oral forward-looking statements attributable to RSO or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this release. Except to the extent required by applicable law or regulation, RSO undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events.

The remainder of this release contains RSO's unaudited consolidated balance sheets, unaudited consolidated statements of income, reconciliation of GAAP net income to FFO and AFFO, Book value allocable to common shareholders rollforward, summary of CDO and CLO performance statistics and supplemental information regarding RSO's CRE loan and bank loan portfolios.


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
               (in thousands, except share and per share data)


                                                    June 30,   December 31,
                                                       2014         2013
                                                  ------------ ------------
                                                   (unaudited)
ASSETS (1)
  Cash and cash equivalents                       $    222,313 $    262,270
  Restricted cash                                       91,215       63,309
  Investment securities, trading                         8,951       11,558
  Investment securities available-for-sale,
   pledged as collateral, at fair value                196,009      162,608
  Investment securities available-for-sale, at
   fair value                                           68,494       52,598
  Linked transactions, net at fair value                13,676       30,066
  Loans held for sale                                   40,286       21,916
  Property available-for-sale                           29,509       25,346
  Investment in real estate                                 --       29,778
  Loans, pledged as collateral and net of
   allowances of $6.5 million and $13.8 million      1,740,656    1,369,526
  Loans receivable-related party net of allowances
   of $700,000 and $0                                    4,751        6,966
  Investments in unconsolidated entities                60,480       69,069
  Derivatives, at fair value                               755           --
  Interest receivable                                   12,028        8,965
  Deferred tax asset                                     7,480        5,212
  Principal paydown receivable                          31,950        6,821
  Intangible assets                                     10,771       11,822
  Prepaid expenses                                       4,153        2,871
  Other assets                                          15,272       10,726
                                                  ------------ ------------
    Total assets                                  $  2,558,749 $  2,151,427
                                                  ============ ============
LIABILITIES (2)
  Borrowings                                      $  1,579,834 $  1,319,810
  Distribution payable                                  28,697       27,023
  Accrued interest expense                               2,063        1,693
  Derivatives, at fair value                             9,855       10,586
  Accrued tax liability                                  2,389        1,629
  Deferred tax liability                                 4,036        4,112
  Accounts payable and other liabilities                 9,948       12,650
                                                  ------------ ------------
    Total liabilities                                1,636,822    1,377,503
                                                  ------------ ------------
STOCKHOLDERS' EQUITY
  Preferred stock, par value $0.001: 10,000,000
   shares authorized 8.50% Series A cumulative
   redeemable preferred shares, liquidation
   preference $25.00 per share, 1,011,743 and
   680,952 shares issued and outstanding                     1            1
  Preferred stock, par value $0.001: 10,000,000
   shares authorized 8.25% Series B cumulative
   redeemable preferred shares, liquidation
   preference $25.00 per share 4,611,294 and
   3,485,078 shares issued and outstanding                   5            3
  Preferred stock, par value $0.001: 10,000,000
   shares authorized 8.625% Series C cumulative
   redeemable preferred shares, liquidation
   preference $25.00 per share 4,800,000 and 0
   shares issued and outstanding                             5           --
  Common stock, par value $0.001: 500,000,000
   shares authorized; 131,153,573 and 127,918,927
   shares issued and outstanding (including
   2,550,103 and 3,112,595 unvested restricted
   shares)                                                 131          128
  Additional paid-in capital                         1,209,488    1,042,480
  Accumulated other comprehensive loss                 (10,194)     (14,043)
  Distributions in excess of earnings                 (277,120)    (254,645)
                                                  ------------ ------------
    Total stockholders' equity                         922,316      773,924
  Non-controlling interest                                (389)          --
                                                  ------------ ------------
    Total equity                                       921,927      773,924
                                                  ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $  2,558,749 $  2,151,427
                                                  ============ ============


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                  CONSOLIDATED BALANCE SHEETS - (Continued)
               (in thousands, except share and per share data)

                                                    June 30,    December 31,
                                                      2014          2013
                                                 ------------- -------------
                                                  (unaudited)
(1) Assets of consolidated VIEs included in
     total assets:
    Restricted cash                                    $88,762       $61,372
    Investment securities available-for-sale,
     pledged as collateral, at fair value              114,641       105,846
    Loans held for sale                                  1,808         2,376
    Loans, pledged as collateral and net of
     allowances of $4.9 million and $8.8 million     1,234,382     1,219,569
    Interest receivable                                  6,955         5,627
    Prepaid expenses                                       154           247
    Principal paydown receivable                        31,950         6,821
                                                 ------------- -------------
    Total assets of consolidated VIEs (a)           $1,478,652    $1,401,858
                                                 ============= =============

(2) Liabilities of consolidated VIEs included in
     total liabilities:
    Borrowings                                      $1,111,314    $1,070,339
    Accrued interest expense                             1,295           918
    Derivatives, at fair value                           9,071        10,191
    Accounts payable and other liabilities               1,958         1,604
                                                 ------------- -------------
    Total liabilities of consolidated VIEs (b)      $1,123,638    $1,083,052
                                                 ============= =============

(a) Assets of each of the consolidated variable interest entities ("VIE"s)
    may only be used to settle the obligations of each respective VIE.
(b) The creditors of the Company's VIEs have no recourse to the general
    credit of the Company.


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except share and per share data)
                                 (unaudited)

                         Three Months Ended           Six Months Ended
                              June 30,                    June 30,
                     --------------------------  --------------------------
                         2014          2013          2014          2013
                     ------------  ------------  ------------  ------------
REVENUES
  Interest income:
    Loans            $     26,219  $     26,184  $     46,448  $     53,996
    Securities              3,391         3,896         7,395         7,538
    Interest income
     - other                  982           635         3,834         2,501
                     ------------  ------------  ------------  ------------
      Total interest
       income              30,592        30,715        57,677        64,035
  Interest expense         10,610        11,134        20,247        22,299
                     ------------  ------------  ------------  ------------
      Net interest
       income              19,982        19,581        37,430        41,736
  Rental income             1,507         5,052         6,659        11,226
  Dividend income              17            17           153            33
  Equity in net
   earnings (losses)
   of unconsolidated
   subsidiaries             1,762            72         3,776          (353)
  Fee income                2,717         1,527         5,473         2,937
  Net realized and
   unrealized gains
   on sales of
   investment
   securities
   available-for-
   sale and loans           4,261         2,394         7,941         2,785
  Net realized and
   unrealized
   (losses) gains on
   investment
   securities,
   trading                   (650)       (1,751)       (2,210)         (635)
  Unrealized gains
   (losses) and net
   interest income
   on linked
   transactions, net        5,012        (5,245)        7,317        (5,504)
                     ------------  ------------  ------------  ------------
      Total revenues       34,608        21,647        66,539        52,225
                     ------------  ------------  ------------  ------------
OPERATING EXPENSES
  Management fees -
   related party            3,314         2,915         6,394         5,893
  Equity
   compensation -
   related party            2,032         2,155         3,699         5,746
  Rental operating
   expense                  1,077         3,624         4,473         7,561
  General and
   administrative          11,896         2,382        20,001         5,863
  Depreciation and
   amortization               760           999         1,596         2,137
  Income tax
   (benefit) expense         (446)        1,737          (430)        3,499
  Net impairment
   losses recognized
   in earnings                 --           535            --           556
  Provision
   (benefit) for
   loan losses                782        (1,242)       (3,178)         (200)
                     ------------  ------------  ------------  ------------
      Total
       operating
       expenses            19,415        13,105        32,555        31,055
                     ------------  ------------  ------------  ------------
                           15,193         8,542        33,984        21,170
                     ------------  ------------  ------------  ------------
OTHER REVENUE
 (EXPENSE)
  Loss on reissuance
   of debt                   (533)           --          (602)           --
  Other expense                --            --        (1,262)           --
  Gain on sale of
   real estate              3,042            --         3,042            --
                     ------------  ------------  ------------  ------------
      Total other
       revenue              2,509            --         1,178            --
                     ------------  ------------  ------------  ------------
NET INCOME                 17,702         8,542        35,162        21,170
  Net income
   allocated to
   preferred shares        (3,358)       (1,800)       (5,758)       (3,111)
  Net loss (income)
   allocable to non-
   controlling
   interest, net of
   taxes                      333          (209)          389            --
                     ------------  ------------  ------------  ------------
NET INCOME ALLOCABLE
 TO COMMON SHARES    $     14,677  $      6,533  $     29,793  $     18,059
                     ============  ============  ============  ============
NET INCOME PER
 COMMON SHARE -
 BASIC               $       0.12  $       0.05  $       0.24  $       0.16
                     ============  ============  ============  ============
NET INCOME PER
 COMMON SHARE -
 DILUTED             $       0.11  $       0.05  $       0.23  $       0.16
                     ============  ============  ============  ============
WEIGHTED AVERAGE
 NUMBER OF COMMON
 SHARES OUTSTANDING
 - BASIC              126,952,493   120,738,176   126,288,516   112,508,254
                     ============  ============  ============  ============
WEIGHTED AVERAGE
 NUMBER OF COMMON
 SHARES OUTSTANDING
 - DILUTED            128,142,637   122,283,503   127,409,127   113,832,183
                     ============  ============  ============  ============

SCHEDULE I


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
              RECONCILIATION OF GAAP NET INCOME TO FFO and AFFO
                    (in thousands, except per share data)
                                 (unaudited)

Funds from Operations

The Company evaluates its performance based on several performance measures, including funds from operations, or FFO, and adjusted funds from operations ("AFFO") in addition to net income. The Company computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts as net income (computed in accordance with GAAP), excluding gains or losses on the sale of depreciable real estate, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for unconsolidated/uncombined partnerships and joint ventures.

AFFO is a computation made by analysts and investors to measure a real estate company's cash flow generated by operations. The Company calculates AFFO by adding or subtracting from FFO the non-cash impacts of the following: non-cash impairment losses resulting from fair value adjustments on financial instruments, provision for loan losses, equity investment gains and losses, straight-line rental effects, share based compensation, amortization of various deferred items and intangible assets, gains or losses on sales of property that are wholly owned or owned through a joint venture, in addition to the cash impact of capital expenditures that are related to its real estate owned. In addition, the Company adds and subtracts from FFO the cash and non-cash impact of reissuances or extinguishments of debt and sales of property, respectively.

Management believes that FFO and AFFO are appropriate measures of the Company's operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs. Management uses FFO and AFFO as measures of its operating performance, and believes they are also useful to investors, because they facilitate an understanding of the Company's operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP, and capital expenditures, that may not necessarily be indicative of current operating performance and that may not accurately compare the Company's operating performance between periods.

While the Company's calculations of AFFO may differ from the methodology used for calculating AFFO by other REITs and its AFFO may not be comparable to AFFO reported by other REITs, the Company also believes that FFO and AFFO may provide the Company and its investors with an additional useful measure to compare its performance with some other REITs. Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to GAAP net income as an indicator of the Company's operating performance or as an alternative to cash flow from operating activities as a measure of its liquidity.

The following table reconciles GAAP net income to FFO and AFFO for the periods presented (unaudited) (in thousands, except share and per share data):


                         Three Months Ended           Six Months Ended
                              June 30,                    June 30,
                     --------------------------  --------------------------
                         2014          2013          2014          2013
                     ------------  ------------  ------------  ------------
Net income allocable
 to common shares -
 GAAP                $     14,677  $      6,533  $     29,793  $     18,059
Adjustments:
  Real estate
   depreciation and
   amortization               214           592           506         1,265
  Gains on sale of
   property (1)            (3,912)           --        (4,778)           22
  Gains on sale of
   preferred equity           (65)           --        (1,049)           --
                     ------------  ------------  ------------  ------------
FFO                        10,914         7,125        24,472        19,346
Adjustments:
Non-cash items:
  Adjust for impact
   of imputed
   interest on VIE
   accounting                  --         1,090            --            --
  Provision
   (benefit) for
   loan losses                688        (1,928)          563        (1,734)
  Amortization of
   deferred costs
   (non real estate)
   and intangible
   assets                   1,963         1,604         4,186         3,470
  Equity investment
   losses (gains)             278          (304)        1,560            32
  Share-based
   compensation             2,032         2,155         3,699         5,746
  Impairment losses            --           535            --           556
  Unrealized (gains)
   losses on CMBS
   marks - linked
   transactions              (439)        6,385        (2,202)        6,385
  Unrealized loss on
   trading portfolio        1,029            --         1,471            --
  Straight line
   rental
   adjustments                 --             1             2             3
  Loss on resale of
   debt                       533            --           602            --
  MTM adjustments on
   consolidated
   European CLO              (146)           --          (146)           --
  PCA expenses                 --            --           300            --
REIT tax planning
 adjustments                  170         1,632         1,127         2,358
Cash items:
  Gains on sale of
   property (1)             3,912            --         4,778           (22)
  Gains on sale of
   preferred equity            65            --         1,049            --
  Gain on the
   extinguishment of
   debt                     3,068         1,716         7,599         5,301
  Capital
   expenditures               (25)         (404)          (38)         (822)
                     ------------  ------------  ------------  ------------
AFFO                 $     24,042  $     19,607  $     49,022  $     40,619
                     ============  ============  ============  ============

Weighted average
 shares - diluted     128,142,637   122,283,503   127,409,127   113,832,183

AFFO per share -
 diluted             $       0.19  $       0.16  $       0.38  $       0.36
                     ============  ============  ============  ============

(1) Amount represents gains/losses on sales of owned real estate as well as
    sales of joint venture real estate interests that were recorded by RSO
    on an equity basis.


SCHEDULE II


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
           BOOK VALUE ALLOCABLE TO COMMON SHAREHOLDERS ROLLFORWARD
                (dollars in thousands, except per share data)
                                 (unaudited)

Balance Sheet - Book Value Reconciliation Year to Date


                                                         Amount   Per Share
                                                       ---------  ---------
Book value at December 31, 2013, allocable to common
 shareholders (1)                                      $ 674,681  $    5.41
Net income allocable to common shareholders - six
 months ended                                             29,793       0.23

Change in other comprehensive loss:
  Available for sale securities                            2,713       0.02
  Derivatives                                              1,332       0.01
  Foreign currency conversion                               (196)        --
Common dividends                                         (51,842)     (0.40)
Proceeds (dilution) from additional shares issued
 during the period (2)                                    17,671      (0.03)
                                                       ---------  ---------
Total net increase (decrease)                               (529)     (0.17)
                                                       ---------  ---------
Book value at June 30, 2014, allocable to common
 shareholders (1)(3)                                   $ 674,152  $    5.24
                                                       =========  =========
(1) Per share calculations exclude unvested restricted stock, as disclosed
    on the consolidated balance sheets, of 2.6 million and 3.1 million
    shares as of June 30, 2014 and December 31, 2013, respectively.
(2) Includes issuance of common shares from the Company's dividend
    reinvestment plan of 2.6 million shares as well as 120,000 shares issued
    upon vesting of shares of restricted stock.
(3) Book value is calculated as total stockholder's equity of $922.3 million
    less preferred stock equity of $248.2 million.


Balance Sheet - Book Value Reconciliation Quarter to Date


                                                         Amount   Per Share
                                                       ---------  ---------
Book value at March 31, 2014, allocable to common
 shareholders (1)                                      $ 665,300  $    5.28
Net income allocable to common shareholders - three
 months ended                                             14,677       0.11

Change in other comprehensive loss:
  Available for sale securities                            3,003       0.02
  Derivatives                                                874       0.01
Common dividends                                         (26,179)     (0.20)
Proceeds (dilution) from additional shares issued
 during the period (2)                                    16,477       0.02
                                                       ---------  ---------
Total net increase (decrease)                              8,852      (0.04)
                                                       ---------  ---------
Book value at June 30, 2014, allocable to common
 shareholders (1)(3)                                   $ 674,152  $    5.24
                                                       =========  =========

(1) Per share calculations exclude unvested restricted stock, as disclosed
    on the consolidated balance sheets, of 2.6 million and 2.7 million
    shares as of June 30, 2014 and March 31, 2014, respectively.
(2) Includes issuance of common shares from the Company's dividend
    reinvestment plan of 2.6 million shares as well as 562,000 shares issued
    upon vesting of shares of restricted stock.
(3) Book value is calculated as total stockholder's equity of $922.3 million
    less preferred stock equity of $248.2 million.

SCHEDULE III


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                SUMMARY OF CDO AND CLO PERFORMANCE STATISTICS
                               (in thousands)
                                 (unaudited)

Securitizations - Distributions and Coverage Test Summary
The following table sets forth the distributions made and coverage test summaries for each of RSO's securitizations for the periods presented (in thousands):


                                           Annualized
                                            Interest
                                            Coverage   Overcollateralization
        Name           Cash Distributions    Cushion          Cushion
                     --------------------- ---------- ----------------------
                     Six Months Year Ended    As of                 As of
                        Ended    December   June 30,     As of     Initial
                       June 30,     31,     2014 (2)   June 30,  Measurement
                      2014 (1)   2013 (1)      (3)     2014 (4)      Date
                     ---------- ---------- ---------- ---------- -----------
Apidos CDO I (5)     $      940 $    4,615 $      936 $   13,213 $    17,136
Apidos CDO III (6)   $    2,135 $    6,495 $    3,766 $    9,882 $    11,269
Apidos Cinco CDO (7) $    5,186 $   12,058 $    9,807 $   19,657 $    17,774
RREF 2006-1 (8)      $    3,349 $   36,828 $    6,083 $   64,077 $    24,941
RREF 2007-1 (9)      $    4,242 $   10,880 $    6,168 $   62,208 $    26,032
RCC CRE Notes 2013
 (10)                $    5,701        N/A        N/A        N/A         N/A
Moselle CLO S.A.
 (11)                $    1,384        N/A        N/A        N/A         N/A

* The above table does not include Apidos CLO VIII or Whitney CLO I, as these CLOs were previously called and were substantially liquidated.


(1)  Distributions on retained equity interests in CDOs (comprised of note
     investments and preference share ownership) and principal paydowns on
     notes owned; RREF CDO 2006-1 includes $231,000 and $28.1 million of
     paydowns during the six months ended June 30, 2014 and the year ended
     December 31, 2013, respectively.
(2)  Interest coverage includes annualized amounts based on the most recent
     trustee statements.
(3)  Interest coverage cushion represents the amount by which annualized
     interest income expected exceeds the annualized amount payable on all
     classes of CDO notes senior to the Company's preference shares.
(4)  Overcollateralization cushion represents the amount by which the
     collateral held by the CDO issuer exceeds the maximum amount required.
(5)  Apidos CDO I's reinvestment period expired in July 2011.
(6)  Apidos CDO III's reinvestment period expired in June 2012.
(7)  Apidos Cinco CDO's reinvestment period expired in May 2014.
(8)  RREF CDO 2006-1's reinvestment period expired in September 2011.
(9)  RREF CDO 2007-1's reinvestment period expired in June 2012.
(10) RCC CRE Notes 2013 closed on December 23, 2013; the first distribution
     was in January 2014. There is no reinvestment period for the
     securitization. Additionally, the indenture contains no coverage tests.
(11) Moselle CLO S.A. was acquired on February 24, 2014; the first
     distribution was in April 2014. The reinvestment period for this
     securitization expired prior to the acquisition of this securitization.


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                          SUPPLEMENTAL INFORMATION
                     (in thousands, except percentages)
                                 (unaudited)

Loan Investment Statistics

The following table presents information on RSO's impaired loans and related allowances for the periods indicated (based on amortized cost):


                                                   June 30,    December 31,
                                                      2014          2013
                                                 ------------  ------------
Allowance for loan losses:
Specific allowance:
  Commercial real estate loans                   $      1,800  $      4,572
  Bank loans                                              441         2,621
                                                 ------------  ------------
Total specific allowance                                2,241         7,193
                                                 ------------  ------------
General allowance:
  Commercial real estate loans                          4,044         5,844
  Bank loans                                              228           770
  Residential mortgage loans                               26            --
  Loans receivable, related party                         700            --
                                                 ------------  ------------
Total general allowance                                 4,998         6,614
                                                 ------------  ------------
Total allowance for loans                        $      7,239  $     13,807
                                                 ============  ============
Allowance as a percentage of total loans                  0.4%          1.0%

Loans held for sale:
  Commercial real estate                         $         --  $         --
  Bank loans                                           15,427         6,850
  Residential mortgage loans                           24,859        15,066
                                                 ------------  ------------
Total loans held for sale (1)                    $     40,286  $     21,916
                                                 ============  ============

(1) Loans held for sale are presented at the lower of cost or fair value.


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                          SUPPLEMENTAL INFORMATION
                                 (unaudited)

The following table presents commercial real estate loan portfolio statistics as of June 30, 2014 (based on par value):


Security type:
Whole loans                                                            92.0%
Mezzanine loans                                                         6.4%
B Notes                                                                 1.6%
                                                                  ---------
Total                                                                 100.0%
                                                                  =========

Collateral type:
Multifamily                                                            42.1%
Hotel                                                                  18.6%
Retail                                                                 16.9%
Office                                                                 15.5%
Mixed Use                                                               3.1%
Industrial                                                              1.3%
Other                                                                   2.5%
                                                                  ---------
Total                                                                 100.0%
                                                                  =========

Collateral location:
Southern California                                                    24.1%
Northern California                                                     8.4%
Texas                                                                  21.0%
Arizona                                                                 9.5%
Florida                                                                 4.9%
Pennsylvania                                                            3.3%
Utah                                                                    3.0%
Washington                                                              2.9%
Minnesota                                                               2.8%
Nevada                                                                  2.4%
Other                                                                  17.7%
                                                                  ---------
Total                                                                 100.0%
                                                                  =========


                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                          SUPPLEMENTAL INFORMATION
                                 (unaudited)

The following table presents bank loan portfolio statistics by industry as of June 30, 2014 (based on par value):


Industry type:
Healthcare, education and childcare                                   15.3 %
Diversified/conglomerate service                                      11.8 %
Chemicals, plastics and rubber                                         6.2 %
Broadcasting and entertainment                                         5.9 %
Leisure, amusement, motion pictures, entertainment                     5.0 %
Automobile                                                             4.8 %
Retail stores                                                          4.7 %
CDO                                                                    4.5 %
Finance                                                                3.9 %
Telecommunications                                                     3.8 %
Hotels, motels, inns and gaming                                        3.5 %
Personal, food and miscellaneous services                              2.8 %
Diversified/conglomerate manufacturing                                 2.8 %
Electronics                                                            2.7 %
Utilities                                                              2.4 %
Oil and gas                                                            2.3 %
Mining, steel, iron and non-precious metals                            2.0 %
Other                                                                 15.6 %
                                                                  ----------
Total                                                                100.0 %
                                                                  ==========

CONTACT:
DAVID J. BRYANT
CHIEF FINANCIAL OFFICER
RESOURCE CAPITAL CORP.
712 Fifth Ave, 12
TH Floor
New York, NY 10019
212-506-3870


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