Resource Capital Corporation's CEO Discusses Q1 2012 Earnings Call Transcript

Resource Capital Corporation (RSO)

Q1 2012 Earnings Call Transcript

May 2, 2012 08:30 a.m. ET

Executives

Jonathan Cohen - President and CEO

David Bloom - SVP - Real Estate

David Bryant - CFO

Purvi Kamdar - IR

Analysts

Steve Delaney - JMP Securities

Gabe Poggi - FBR Capital Markets

Presentation

Operator

Good day ladies and gentlemen and welcome to the Q1 2012 Resource Capital Corporation Earnings Conference Call. My name is [Pomi] and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference.

(Operator Instructions) As a reminder this call is being recorded for replay purposes.

I would like to turn the conference over to Mr. Jonathan Cohen, President and CEO. Please proceed sir.

Jonathan Cohen

Thank you for joining the Resource Capital Corp. conference call for the first quarter ended March 31, 2011. I am Jonathan Cohen, President and CEO of Resource Capital Corp.

Before I begin, I would like to ask Purvi Kamdar, our Director of Investor Relations, to read the Safe Harbor statement.

Purvi Kamdar

When used in this conference call, the words believe, anticipate, expect and similar expressions are intended to identify forward-looking statements. Although the company believes that these forward-looking statements are based on reasonable assumptions, such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from these contained in the forward-looking statements.

These risks and uncertainties are discussed in the company’s reports filed with the SEC including in the forms 8-K, 10-Q and 10-K and in particular, item 1-A on the Form 10-K under the title Risk Factors. Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as the date hereof. The company undertakes no obligation to update any of these forward-looking statements.

And with that, I’ll turn it back to Jonathan.

Jonathan Cohen

First, a few highlights. Adjusted funds from operations or AFFO, for the three months ended March 31, 2012 was 18.6 million or $0.23 per share diluted. We paid a $0.20 per share for common share for the quarter in dividends or 16.9 million in aggregate on April 27, 2012 to stockholders of record as of March 30, 2012.

Our book value increased to $5.46 per share this quarter from $5.38 as of December 31, 2011. Our GAAP net income for the three months ended March 31, 2012 was 14.5 million or $0.18 per share diluted as compared to 13.1 million or $0.22 for the three months ended March 31. 2011.

Total revenues increased by 4.7 million or 23% as compared to the three months ended March 31, 2011 a year earlier. Provisions for loan losses decreased by 16% as compared to the three months ended March 31, 2011, and decreased 64% as compared to the three months ended December 31, 2011.

With those highlights out of the way, I will now introduce my colleagues. With me today are David Bloom, Senior Vice President in charge of real estate; David Bryant, our Chief Financial Officer; and Purvi Kamdar, our Director of Investor Relations.

After reviewing our quarterly results, one of our directors said to me, congratulations, seems very straightforward and good. That sentiment is a very good summary of our performance this quarter. We made money from our portfolio, grew our book value, our credit quality was good, we kept our debt levels relatively low and opportunities to expand the franchise and company remained ever present.

From a financial standpoint, our Adjusted Funds From Operations or AFFO rose to $0.23 from $0.21 last quarter. We paid a sizeable and sustainable dividend of $0.20 for the quarter, and our book value per share increased to $5.46 per share from $5.38 per share as of December 31, 2011.

From an operational standpoint; we also faired well. While our real estate loan production only posed $17 million of net investment for the quarter, we did not sell any loans or get paid off on any loans. Our loan book actually grew.

In addition our pipeline for real estate loans grew substantially and we are in the process of closing $73 million of new real estate loans during the second quarter. As Dave Bloom will tell you, over 85% of our current real estate portfolio are now whole loans, senior loans, and less than 11% mezzanine positions.

We worked hard to obtain those ratios. Also late in the quarter we closed a $150 million warehouse line with Wells Fargo. This will really expand our ability to accelerate our whole loan origination and to generate additional growth. The world of real estate finance is finally [settling], and this should add I believe to our portfolio over the next few quarters.

Our Syndicated Bank Loan portfolio continued to perform well. Credit improved substantially across the entire company, provisions for loan decreased 64% from last quarter. This trend has continued over the last few quarters.

Our leasing joint venture continues to grow and improve its portfolio. We expect that venture to turn profitable later this year. We continue to be very excited about its prospect.

Without a doubt, the most exciting aspect of the last three months was all of the growth in our businesses. As compared to the quarter ending, March 31, 2011; this quarter we recorded revenues of 25.4 million versus 20.6 million a year ago; a tremendous achievement given the steadfastness of our debt-to-equity level.

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

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