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Resource Capital CEO Discusses Q3 2011 Results - Earnings Call Transcript

Stocks in this article: RSO

Consistent with our goal to strengthen our assets, our commercial real estate portfolio is now approximately 84% whole loans as compared to 66% a year ago. A very active quarter and one that is positioning us to obtain our goal.

You will hear us talking about funds from operations as an alternative measure to look at our earnings. This change is necessary due to – is necessary as we have begun a strategy of selectively acquiring distress and value-added properties.

This strategy will mean that we will have far more depreciation run through our income statement and FFO, or Funds from Operations, will back this out so an investor can have a clear perspective on how we are doing. This is another strategy to build long-term book value through appreciated investments, while maintaining strong cash flow and a high dividend.

So far, in my opinion, we have excelled in this strategy.

In total we own properties with approximately 10 to $15 million in equity, and expect returns in excess of 18%, including 5 to 10% cash-on-cash returns in the first year growing. We have done this through joint ventures as well as directly through our management company.

Credit generally continued to improve and our provisions for loan loss has decreased significantly, nearly 70% from the prior year. We believe the credit environment is still improving for real estate, but we are certainly aware of the weaker macro situation.

While credit on our legacy loans continues to improve, this part of our asset base has decreased due to the growth of our business.

Read the rest of this transcript for free on seekingalpha.com

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