Good day ladies and gentlemen and welcome to the second quarter 2011 Resource Capital Corporation Earnings Conference Call. My name is Janeida [ph], and I will be your operator for today. (Operator instructions) I would now like to turn the conference over your host for today, Mr. Jonathan Cohen, President and CEO. Please proceed.

Thank you for joining the Resource Capital Corp conference call for the second quarter ended June 30, 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.

Thank you Jonathan. When used in this conference call, the words believes, anticipates, expects 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 report filed with the SEC including its reports on forms 8-K, 10-Q and 10-K, and in particular item 1-A on the form 10-K report under the title Risk Factors. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of 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.

Thank you Purvi. For a few highlights, we had adjusted net income of $18 million or $0.25 per share diluted and $33.7 million or $0.51 per share diluted for the for the three and six months ended June 30, 2011 respectively, as compared to $10.9 million or $0.24 per share diluted and $21.1 million or $0.51 per share diluted for the three and six months ended June 30, 2010 respectively, which is an increase of $7.1 million or 65% for the quarter and $12.6 million or 60% for the six months. We announced a dividend of $0.25 per common share for the quarter or $18.6 million in aggregate, which was paid on July 27, 2011 to stockholders of record on June 30, 2011. With those highlights out of the way I will now introduce my colleagues. With me today are David Blume, Senior Vice President in charge of Real Estate; David Bryant, our Chief Financial Officer; Christopher Allen, Senior Vice President of our Leverage Loan Business; and Purvi Kamdar, our Director of Investor Relations. The second quarter of 2011 saw consistency for resource capital, but it was also a very active period in terms of moving forward with our plans. We continue to build our investment portfolio while paring some older and riskier real estate positions. In fact, we were originated more than $61 million of real estate whole loans for the quarter. This is self originated by our team, and are in the process of closing even more after June 30, a tremendous effort. We saw an increase in our net interest income of over $2.7 million or 17% for the quarter ending June 30 versus a year ago, and $7.2 million or 25% for the six months ended June 30, 2011 versus the first six months of 2010.…

Thanks very much Jonathan. Resource Capital Corp’s commercial mortgage portfolio has a current committed balance of approximately $706 million in a granular pool of 46 individual loans. On our call last quarter, the portfolio had a balance of 664 million, however, as Jon mentioned, in the second quarter we sold two legacy positions, and received two pay-offs totaling $52 million, which reduced the size of the portfolio $612 million. There has been a net increase of $94 million in the size of our portfolio since our last call, and with our full forward pipeline, we see the size of our portfolio continuing to grow appreciably. The collateral base underlying the portfolio continues to be spread across the major asset categories in geographically diverse markets with a portfolio breakdown of 37% multifamily, 11% office, 27% hotel, 11% retail and 14% other such as light industrial and self-storage. Our portfolio of commercial mortgage positions is in components as follows, 80% whole loans, 14% mezzanine loans, and 6% B-notes. Still of note in our portfolio composition is the significant increase in the percentage of our self originated whole loans, and the corresponding decrease in our subordinated debt positions. We continue to benefit from a 15% year-over-year increase in our self originated whole loan positions from 65% in August of 2010 to 80% we have in portfolio today. This mix shift is the result of our origination of new whole loans and the sale of legacy subordinate debt positions. Since we have been actively originating new loans again, which began in the fourth quarter of 2010, we have originated and closed, or in the process of closing a total of 12 new loans with an aggregate balance of approximately $139 million. We have steadily ramped up our loan production and our originations by quarter…

Thanks Dave. Now I’d like to review our investment in commercial finance. In January we transformed our previous investment into a new one and now we own our interest through a joint venture we formed with LEAF Financial and Guggenheim Securities. This JV is going well and is building its balance sheet, its proprietary vendor finance programs and its staff. We have been encouraged by the results in building the vendor finance business and are committed to making LFC [ph] into an industry leader. RSO preferred stock investment has a stated dividend rate of 10%, and earned $1.5 million in dividends during the six months ended June 30, 2011. Remember, we also have warrants to purchase 48% of the business at a nominal price. These warrants give us the upside we are looking for while the coupon gives us the ability to generate a nice current return. As for our syndicated bank loan business I want to introduce Christopher Allen, our Senior Vice President of Leveraged Loans, who will walk us through our existing portfolio, and our recent purchase of the management piece of Churchill Pacific, which is now Resource Capital Asset Management, or RCAM. Chris.

(inaudible) and the Chief Operating Officer of Apidos Capital Management, and worked together with Gretchen Bergstresser, who is the senior portfolio manager. Resource Capital has direct exposure to bank loans through three CLOs managed by Apidos, and it earns fees on additional bank loans through its ownership of Resource Capital Asset Management, formerly Churchill Pacific Asset Management. Resource Capital’s three bank loan portfolios have a carrying value of $903.5 million and approximately $929.3 million [ph] in par value. Resource Capital Asset Management has additional assets under management of approximately $1.8 billion. For the most recent quarter, the three CLOs that the company owns produced interest income 23% higher than during the second quarter of 2010. Apidos CLOs have produced annualized equity returns of 24% since the inception for Resource Capital. The current cash on cash returns based upon our original investment of $79.5 million is approximately 37%. The carrying value of our bank loan portfolio is approximately $61 million representing approximately $0.82 of book value per share so that the return on equity of our bank loan investments is approximately 53% with remaining upside to the gain from accretion from loans and securities that we purchased at a discount in the amount of nearly $22 million. Overall, in my opinion, the portfolios remain in excellent condition, and very little has changed since last quarter. We remain very diversified across industries. The average position size is about 31 basis points or roughly $1 million. The highest concentrations are in healthcare, business services, chemicals and automotive. Included in the top ten holdings are issuers such as Community Health Systems, SunGard Data Systems, Cablevision and Flextronics. The average rating is between a B2 for Moody’s and a B+ from S&P; strong ratings for loans suitable for CLOs. There is very little triple CCC…

Thanks Chris. Now I will ask Dave Bryant, our CFO to walk us through the financials.

Thank you Jonathan. RSO’s board declared a cash dividend for the second quarter of $0.25 per common share, which approximates to our adjusted net income for the quarter. Our estimated REIT taxable income for the second quarter of 2011 was $2.9 million or $0.04 per common share diluted. REIT taxable income in the second quarter was impacted by three tax deductions not included in GAAP earnings, namely losses from a real estate joint venture of $6.4 million, a capital loss carryover of 3.5 million utilized during the second quarter, and losses of 1.3 million on the bank loan portfolio. Combined these 3 non-cash deductions of $11.2 million, each representing timing differences reduced REIT income by $0.16 per share without affecting our liquidity and/or ability to pay the $0.25 dividend, for what is now the seventh consecutive quarter. We continue to pass all of the critical interest coverage and over collateralization tests in our two real estate CDOs and three bank loan CLOs through July of 2011. The over collateralization and interest coverage tests in each of our real estate CDOs was improved by our cancellation of several previously repurchased bonds on June 21, which added to our equity interest in these securitizations. Each of these finances performed in generating stable cash flow to RSO in the second quarter. The real estate CDOs produced over $9.9 million and bank loan CLOs generated over $13.5 million of cash flow for the six months ended June 30. Of note, as of July 29th we have in excess of $176 million in restricted cash, comprised of approximately $68 million and over $118 million in our bank loans and real estate deals respectively. This cash is available for reinvestment in our CLOs and CDOs to generate very attractive spreads over the cost of the associated…

Thanks Dave. We are excited to reap the benefits of new opportunities that we have already seized and to take advantage of even more opportunities as we have started to do so already. We look forward to sharing the results and any color on them with you in future periods. Now we will open up the call to any questions. Thanks.

(Operator instructions) Your first question comes from the line of Steve Delaney with JMP Securities. Please proceed. Steve Delaney – JMP Securities: Thank you. Good morning everyone.

Good morning Steve. Steve Delaney – JMP Securities: Congrats on the success on building the origination pipeline.

Thank you. Steve Delaney – JMP Securities: My first question had to do with the realized investment gains in the quarter. I think it was 3.7 million, you described the impairment of about 4 million on the – I think those were 2007 CMBS. Can you give us a little background on what securities were involved in the realized investment gains?

For the most part that was securities that we bought in the downturn in 2009 and in May and June, sold in what was near the peak of the CMBS market. Steve Delaney – JMP Securities: Right. Okay. So taking some gains out of that legacy portfolio?

Yes, and now a lot of the securities are a lot cheaper now, so now we are looking at them again. Steve Delaney – JMP Securities: And using your wealth lines for that?

Either using the wealth or we have room in some of the CDOs. Steve Delaney – JMP Securities: Correct. Okay, and then I just want to clarify a couple of things when Dave was going through, so I believe I heard him say that of the 187 million or so of cash in the structures, was the number 118 million in the two CRE CDOs?

It was in the real estate CDOs 118 million Steve.

Even I want to point out that part of our lag in putting our cash here, a lot of the loans that we closed in this quarter closed towards the end of the quarter. so we didn’t really pick up much interest income from them, and then we have pending really this week, and last week and the week before, probably about I think 40 some odd 15 million of new loans that they have originated. So when you look at it, our investment book and our investment income in the next quarter should be a lot heavier from the real estate side. Steve Delaney – JMP Securities: Understood.

A lot of that cash will be used within the CDOs. Steve Delaney – JMP Securities: Given that you have got a pipeline of about 200 million against that 118 million, are you starting to look at other funding sources that would allow you to continue to fund once you have pretty much used up your free cash and the CDOs?

Yes, we are in the final sort of final finals with a bunch of facilities that will enable us to use – continue to grow that business significantly after over the next like three months, four months, as we finish off the cash that is in those CDOs, we will be able to continue to grow the business. Remember that one of the parts of the business that has come back, which we like is that people pay off their loans, and we can replace them because we do get acquisition – because we do get origination and deeds [ph] and occasionally some sort of upside through the sale of a property. Steve Delaney – JMP Securities: Okay and then one last thing guys, sorry to be tedious with these numbers, but just wanted to get it straight.

Go ahead, of course, Steve. Steve Delaney – JMP Securities: The second quarter loan loss provision, the 4.1, Bryant did I hear you correct, included in there is the 2 million increase in the bank loan provision is included in that 4.1?

Correct. Steve Delaney – JMP Securities: Okay, and that you said was sort of a one relating…

And that was just a very odd restructuring situation that surprised people, and we felt based on the accounting and the situation that it was more prudent to book a reserve, even though who knows what really happens there. Steve Delaney – JMP Securities: Okay. Well thanks a lot for the comments and good job on getting this pipeline built up.

Thanks Steve.

Your next question comes from the line of Lee Cooperman with Omega Advisors. Please proceed. Lee Cooperman – Omega Advisors: Yes, hi. Thank you very much. Good morning to you.

Good morning. Lee Cooperman – Omega Advisors: Thanks for the comprehensive rundown. I have kind of question along the final line, you mentioned the commitment to the dividend, which has been steadfast, and you have lived up to that commitment, but you are really saying for the rest of 2011, which really the year is more than half over, question, if your dividend was limited in 2012 to your expected cash earnings, and not the dollar, but cash earnings, how much lower are cash earnings then your present dollar dividend is expected to be? Or possibly do you expect cash earnings in 2012 to be in line with the present dividend?

No, we wouldn’t keep the dividend here if we didn’t expect at this point that the cash earnings would be $1. And we have 235 million that we have to put up in order to get the cash earnings of the company on a basic, we are on $0.13, but we had $0.25 of adjusted to get it to that $0.25, you need to put that $235 million out, and stop selling investments during the quarter. so we expect when we model out to get to $1 and stay there. Lee Cooperman – Omega Advisors: I think I heard what you said, but I want to make sure, you expect by the time you employ this capital in 2012 you will be earning enough money and cash to maintain the dollar dividend?

Yes, exactly Lee. The reason I didn’t say 2011 is because as we put out the money, of course, interest rates of the 10-year bond have gone from when I first started talking like 4% [ph], now they are at whatever 7% [ph]. and it becomes harder and harder to put out money at 9% or 10% or 8% unlevered, so really there are swing factors, but right now as we model out the dividend is good to go at $1. Lee Cooperman – Omega Advisors: Thank you. Good luck. You have done a very good job relative to your peer group.

Thanks Lee.

(Operator instructions) Your next question comes from the line of Gabe Poggi with FBR. Please proceed. Jack – FBR: Hi, good morning guys. It is Jack [ph] for Gabe.

Hi Jack. Jack – FBR: First question is, could you please comment on how much equity you expect to contribute to the new Apidos CLO transaction?

It is really up in the air now, because we do have enquiries from other outside investors, who also want to participate in the equity. So, it could be as much as $30 million to $40 million eventually. We have 10 million or 15 million or 20 million that is already up on the line that is accumulating assets. So it will probably be another $15 million or $20 million, nothing that would cause us to raise capital in the marketplace. Jack – FBR: Great, thanks. And then switching gears a little bit on the two properties you took back in the quarter, could we get a little more color there in terms of if there is cash flowing, and maybe just a little bit more about those situations?

Sure. This is Dave Bloom. The two properties were actually very strong performers from a cash perspective. We originated them ourselves, and when we originated them we put in some pretty hefty triggers for renewals that required substantial delevering and some fees to the extent that that the parties didn’t make it. We were more than happy to step in and take these properties. These are great opportunities and over time we will really do extremely well. I think it was the structuring of the heavy triggers for extension that allowed us to walk in. in one such situation we also had substantial personal recourse that we were able to use to get the property and were happy to have them in portfolio.

I just want to add, this is Jon. As we look at the book of Resource Capital, we are trying to take 10% or more and be opportunistic and actually own real estate. We just bought another property that was sort of an opportunistic value add apartment situation that we thought was coming in very low in terms of pricing. We were doing things that were opportunistic to build book value over time for our shareholders, and this is a great example of even though, the accounting made you book a loss on one of the loans, really when we look at it with a few little tweaks and all the great cash flow from the properties, these are incredible situations that will enable us to build value, and we’re looking forward to that. Jack – FBR: Great. Thanks a lot guys.

Thanks Jack.

And at this time we have no further questions. I would now like to turn the call back over Jonathan Cohen for any closing remarks.

Well, thank you very much, and we look forward to next quarter.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation and you may now disconnect. Have a great day.