Full Description

Resource Capital Corp. is a specialty finance company that focuses primarily on commercial real estate and commercial finance. The Company conducts operations as a real estate investment trust (REIT). The Company invests in a combination of commercial real estate debt and other real estate-related assets and, to a lesser extent, higher-yielding commercial finance assets. The Company is managed by Resource Capital Manager, Inc., a wholly owned indirect subsidiary of Resource America, Inc., a asset management company that uses industry specific expertise to generate and administer investment opportunities for its own account and for outside investors in the commercial finance, real estate, and financial fund management sectors. As of December 31, 2008, Resource America managed approximately $17.5 billion of assets in these sectors.

The Company has three direct wholly owned subsidiaries. RCC Real Estate, Inc. holds real estate investments, including commercial real estate loans. RCC Real Estate, Inc. owns 100% of Cayman Islands limited liability companies and qualified real estate investment trust (REIT) subsidiaries (QRS); Resource Real Estate Funding CDO 2006-1 and Resource Real Estate Funding CDO 2007-1. RCC Commercial, Inc. holds bank loan investments and real estate investments, including commercial and residential real estate-related securities. It owns 100% of Cayman Islands limited liability companies and taxable REIT subsidiaries (TRS); Apidos CDO I, Ltd.; Apidos CDO III, Ltd., and Apidos Cinco CDO, Ltd. Resource TRS, Inc. is the Company's directly owned TRS that holds all the Company’s direct financing leases and notes.

Commercial Real Estate-Related Investments

The Company originates first mortgage loans, or whole loans, directly to borrowers. It invests in senior interests in whole loans (A notes), either directly originated or purchased from third parties. A notes are loans that, generally, consist of senior participations in, or a senior tranche within a first mortgage. The Company also has subordinate interests in whole loans (B notes), which are either directly originated or purchased from third parties. B notes are loans secured by a first mortgage and subordinated to an A note.

Resource Capital also invests in mezzanine loans that are senior to the borrower’s equity in, and subordinate to a first mortgage loan on, a property. These loans are secured by pledges of ownership interests, in whole or in part, in entities that directly own the real property. The Company's portfolio contains a mix of property types with 94% of the portfolio focus on four types: Multifamily 30%, Office 23%, Hotel 27% and Retail 14%. Resource Capital likewise invests in commercial mortgage-backed securities (CMBS), which are securities that are secured by or evidence interests in a pool of mortgage loans secured by commercial properties. These securities may be senior or subordinate and may be either investment grade or non-investment grade.

Residential Real Estate-Related Investments

Historically, the Company had invested in agency residential mortgage backed securities (RMBS) and non-agency asset backed securities-RMBS portfolios. The agency RMBS portfolio was sold in September 2006, while 10% of the equity invested in an ABS-RMBS portfolio was sold in November 2007.

Commercial Finance Investments

The Company acquires senior and subordinated, secured and unsecured loans made by banks or other financial entities. It invests in small- and middle-ticket full payout equipment leases and notes. The Company also invests, to a lesser extent, in bonds which pay holders a coupon periodically until maturity of the bonds, when the face value is due.