Resource Capital Corp. (NYSE:RSO) Files An 8-K Completion of Acquisition or Disposition of AssetsItem 2.01.
On July31, 2017, in connection with the previously-disclosed sale of LEAF Commercial Capital, Inc. (“LCC”) to People’s United Bank, N.A., RCC TRS, LLC (formerly Resource TRS, Inc.), a wholly-owned subsidiary of Resource Capital Corp. (the “Company”), received proceeds of $84.3million in cash for its 31,341 shares of Series A Redeemable Preferred Stock, 8,127 shares of SeriesA-1 Redeemable Preferred Stock, 4,872 shares of Series B Redeemable Preferred Stock and 2,364 shares of SeriesD Redeemable Preferred Stock. At March31, 2017, the Company’s total investment in LCC was carried on its balance sheet as an investment in unconsolidated entities at $43.1million.
|Item 2.01.||Financial Statements and Exhibits.|
|(b)||Pro forma financial information.|
On July31, 2017, Resource Capital Corp. (the “Company”) received proceeds of approximately $84.3million in cash through its wholly-owned subsidiary RCC TRS, LLC (formerly Resource TRS, Inc.) in connection with the sale of LEAF Commercial Capital Inc. (“LCC”), an equity-method investment carried on the Company’s balance sheet at $43.1million at March31, 2017.
If the transaction had occurred on March31, 2017, the pro forma consolidated balance sheet would have reflected pro forma adjustments to increase cash and cash equivalents by $84.3million and to reduce investments in unconsolidated entities by $43.1million, distributions in excess of earnings by $37.3million and deferred tax asset, net by $3.9million. As of March31, 2017, pro forma total assets and total equity would have been $2.0billion and $742.3million, respectively. The Company has sufficient net operating losses to fully offset the federal taxable gain resulting from the sale of LCC, and the realization of the Company’s deferred tax asset was dependent on the sale of its investment in LCC.
If the transaction had occurred on January1, 2016, the pro forma consolidated statement of operations for the twelve months ended December31, 2016 would have reflected a pro forma adjustment to decrease equity in earnings of unconsolidated entities by $943,000, which reflects the Company’s share of LCC’s net earnings for the period. Pro forma net loss allocable to common shares would have been $53.9million for the year ended December31, 2016. Pro forma basic and diluted net loss per common share would have decreased $0.03 per share to $(1.76) per share.
If the transaction had occurred on January1, 2016, the pro forma consolidated statement of operations for the three months ended March31, 2017 would have reflected a pro forma adjustment to decrease equity in earnings of unconsolidated entities by $165,000, which reflects the Company’s share of LCC’s net earnings for the period. Pro forma net income allocable to common shares would have been $2.5million for the three-month period ended March31, 2017. Pro forma basic and diluted net income per common share would have decreased $0.01 per share to $0.08 per share.
About Resource Capital Corp. (NYSE:RSO)
Resource Capital Corp. is a real estate finance company. The Company invests in asset classes, which include commercial real estate-related assets, residential real estate-related assets and commercial finance assets. Its investments in commercial real estate-related assets include first mortgage loans (referred as whole loans); first priority interests in first mortgage loans; subordinated interests in first mortgage loans, and commercial mortgage-backed securities. Its investments in residential real estate-related assets include residential mortgage loans and mortgage-backed securities. Its investments in commercial finance assets include middle-market secured corporate loans and preferred equity investments; asset-backed securities backed by senior secured corporate loans; debt tranches of collateralized debt obligations and collateralized loan obligations, and senior secured corporate loans (referred as bank loans). It is externally managed by Resource Capital Manager, Inc.