Good day, ladies and gentlemen, and welcome to the Quarter One 2013 Resource Capital Corp Earnings Conference Call. My name is Sheena and I will be your operator today. (Operator Instructions). As a reminder, this call is being recorded for replay purposes. And now I’d like to turn the call over to Mr. Jonathan Cohen, President and CEO of Resource Capital. Please proceed sir.

Thank you. And thank you for joining the Resource Capital Corp conference call for the first quarter ended March 31, 2013. I’m 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 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 by the DSEC including its reports on Forms 8-K, 10-Q and 10-K and in particular Item 1A on the Form 10-K reporting to 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.

Thank you, Purvi. First a few highlights. Adjusted funds from operations, AFFO, were $0.20 for the three months ended March 31, 2013. Book value to common shareholders was $5.60 per share at March 31, 2013. Total revenues increased by $1.9 million or 6.4% as compared to the three months ended March 31, 2012. We paid a dividend of $0.20 per common share for the three months ended March 31, 2013, and during that period we originated $61.4 million of new commercial real estate loans. 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 Lending; David Bryant, our Chief Financial Officer; and of course, Purvi Kamdar, our Director of Investor Relations. Probably the most significant developments for the quarter was the momentum we are seeing in commercial real estate loan originations. We increased originations to over $61 million in the first quarter while we believe adhering to our solid underwriting and quality standards. That momentum has certainly carried over to the second quarter where we expect to originate substantially more than the first quarter. This growth in origination has been met by our ability to obtain new financing. During the quarter we expanded our facility with Wells Fargo from $150 million facility to $250 million and are in conversations to obtain an additional line of credit from another major financial institution for $150 million to $200 million more. The ability to finance our long-term originations combined with the nascent or reborn securitization markets for our products means that we can competitively originate high quality loans and hold them on our balance sheets. The dynamics in my opinion are very conducive to our core business. To augment the debt side of the balance sheet…

Thanks very much, Jonathan. Resource Capital Corp’s commercial mortgage and CMBS portfolio has a current committed balance of approximately $1.032 billion in a diverse and granular pool. RSO’s commercial mortgage portfolio is comprised of 56 individual loans with an aggregate committed balance of approximately $732 million. The underlying collateral base continues to be geographically diverse, spread across the major asset categories with a portfolio breakdown of 24% multifamily, 12% office, 23% hotel, 28% retail, and 13% other such as research and development and mixed use. The portfolio is in components as follows: 84% whole loans, 14% mezzanine loans, and 2% B-notes. During the first quarter of 2013 through today RSO closed six new loans totaling $88.8 million with eight more loans in process totaling another $80 million. Currently RSO has issued applications on four new loans totaling approximately $53 million, is in negotiations on an additional $107 million of new lending opportunities and is actively underwriting additional loans totaling approximately $300 million. We note improving metrics across all asset classes with the majority of the properties securing our loans realizing improved cash flow year-over-year and continuing to trend in an upward direction. In addition we are pleased to see that the majority of the asset-specific business plans across the portfolio are well on track and progressing towards the realization of borrowers’ plans for value creation and the entire portfolio remains performing with no defaults. While we see many lending opportunities we remain keenly aware of credit, value and deal structure. And although we are lending on lightly transitional properties we continue to focus on business plans that stand up to rigorous underwriting and verification and on loans with Day One cash flow coverage and meaningful sponsor equity. As Jonathan mentioned, RSO increased and extended our existing $150 million term financing…

Now I will. Thanks, Dave. Now I will quickly review our syndicated bank loan portfolio. Resource Capital syndicated bank loan portfolio has a carrying value of approximately $1.2 billion at amortized costs. Overall, our portfolios remain in excellent condition. As of March 31, 2013 we had specific reserves of $2.6 million and general reserves of $5.2 million as compared to specific reserves of $3.2 million and general reserves of $6.5 million for the fourth quarter of 2012. We continue to forecast a good outlook in corporate credit in the future. The default rate for the last 12 months was 0.18%, 18 basis points. This has been a great business line for Resource Capital and we will continue to allocate capital to the corporate credit world. In addition to our portfolio of syndicated bank loans, we also collect management fees from our acquisition of the right to manage five other CLOs. During the last three months we received $1.4 million in fees. Now I will ask Dave Bryant, our Chief Financial Officer, to discuss our financials.

Thank you, Jonathan. RSOs board declared a cash dividend for the first quarter of $0.20 per common share or approximately $21.6 million. Our adjusted funds from operations, or AFFO, for the first quarter was $21 million or $0.20 per share, per common diluted respectively. AFFO for the period was impacted by several noncash adjustments netting to $5.6 million and to a less extent net cash inflows of approximately $3.1 million. We passed all of the critical interest coverage and over collateralization tests in our two real estate CDOs and five bank loan CLOs as of March 2013. Each of these financing structures performed well and continue to generate stable and even improving cash flow to us in 2013. The commercial real estate CDOs produced approximately $22 million including a return of principle of $16 million on our ownership of the RREF 2006 senior note class. Bank loan CLOs generated approximately $9 million of cash flow during the three months ended March 2013. These amounts compare favorably to the same period in 2012 when they generated $6.3 million and $6.7 million from real estate and bank loans respectively. This cash flow improvement reflects a better credit environment as well as our ability to invest recycled capital. As of March 31, we have in excess of $107.6 million of restricted cash in these structures, comprised of approximately $107 million and $729,000 in our bank loans and real estate deals respectively. Of these balances, $35.7 million is available for reinvestment and two of our CLOs which we expect to provide attractive spreads over the cost of the associated debt which is a very inexpensive weighted average rate of 1.46%. The balance is primarily being used to pay down notes outstanding and de-leverage our balance sheet. All of the real estate principal cash balances…

Thank you, Dave. And with that I will open the call for any questions.

(Operator Instructions). Our first question is from Steve DeLaney, JMP Securities. Please proceed. Steve DeLaney – JMP Securities: Good morning, everyone.

Hi, Steve. Steve DeLaney – JMP Securities: Jonathan, congratulations on a solid quarter. It’s pretty obviously just looking at the trend back two or three quarters that the quality of earnings is improving in terms of the recurring nature and it’s encouraging to see that progress, especially the loan loss provision of only $1 million.

Thank you. Steve DeLaney – JMP Securities: That was great to see. So a couple things. I guess the new – really appreciate the press release on these large originations. That’s helpful for modeling and just to keep the story going. But I like the idea of the structure where you’re going to sell of an A-note and hold the mezz. The press release didn’t talk about loan coupon. But could you comment maybe just on a general range of which you would expect your, once the loan is structured and the A-note is sold, on your retained mezz piece, what type of target yield would you be looking for there?

Well we don’t like to talk about loan coupons just because it doesn’t help our business for everybody to know exactly what one guy got on one property. But just in general, depending on the quality of the property, our loan coupons can range anywhere from 5.75% to 8.5%, depending on the quality of the property. Then this is on the whole loan. And you can think to yourself that we’re borrowing somewhere between 65% and 75% on an A-note or 60% to 70%, depending on if it’s a sold A-note or whether we borrowed on our line. And we borrow at 2% and change from the banks. And we think that in the securitization market, that goes down to 1% and change. And so that’s the rough math. Steve DeLaney – JMP Securities: Okay. We can back into that.

Yeah. And just generally, you should know that we look at it on a levered return, whether it’s a mezz piece or mezz piece or a whole loan that we lever. We look at that as somewhere between a mid-teens, 13, 14, and up to 20% return with all the fees involved over a two-year holding period. Steve DeLaney – JMP Securities: Okay. Within, switching over to the plan to eventually do a CLO, within your loan portfolio, obviously you’ve got $1 billion, but a lot of that is the legacy stuff. I’m focused on the $223 million of originations in the last 12 months. I don’t know if any of that is those near-term originations have repaid. But can you estimate what you have under your bank lines? In other words, what collateral do you have earmarked for a potential structuring with the CLO? And what would be the minimum size of a collateral pool before you would find it efficient to pull the trigger?

Well I think that it’s hard to estimate. Right now, as I said in my comments, and I think Dave echoed in his comments, we did 60, $60-some odd million last quarter. We’re looking at a much greater number this quarter and a much greater number the quarter after that. So with that happening, a lot of the prepayments, as I said, came from legacy loan. Steve DeLaney – JMP Securities: Yes.

So we sold a legacy loan, we had a legacy loan prepay and then – which is always nice, because they have pretty nice exit fees as well and we like to move the portfolio to a newer portfolio. And then two loans that were originated very close to the start of the real estate lending market in 2009, 2010. So we often have a lot of prepayment or no prepayment clauses in the loans we originated over the last 18 months, let’s say. So I would say we probably need a portfolio to start marketing over $125 million or so and we’ll go to work somewhere around $150 million to $200 million range on the line. And we ended the last quarter probably with $65 million to $75 million, up to $93 million, I think, by now.

And what Jon is saying there, Steve, is $93 million is the total loans on that facility. [64] [ph] borrowing is the outstanding fees.

So we’re going to get that ramped up. We’re putting loans in April and in May and we hope to access that market accordingly. Now, the difference really is, is that it frees up our lines. We don’t really need to free up our lines because we have a decent amount. We’ve expanded our relationship with Wells, which we’re grateful for, and we also have – we’re close to a new line that we’re going to sign with another major financial institution. But it will help with the borrowing, the rate and so we’re excited for that as well. Steve DeLaney – JMP Securities: Well, it certainly sounds like you’ve got enough funding capacity that you can approach the CLO market where you don’t necessarily just have to be a price taker, you can be...

All of the prices are starting to feel – the prices on the AAAs are starting to feel pretty good. So we may be a price taker. But I just want to add that you can see by the fact that we’re opening up another facility and expanding Wells, our take on our business, where it’s going and what we need to accomplish then over the next 12 months. Steve DeLaney – JMP Securities: With respect to the origination volume outlook?

Yes, exactly. Steve DeLaney – JMP Securities: And just one final thing, and I’ll drop off. I noticed no gain on debt extinguishment this quarter after obviously a big item in fourth quarter of $11 million. Would you say that in terms of projecting and expectations, would you say that trade, where we are now with spreads tightening and everything, is that trade about done and we should just focus on...

No, I mean, the trade’s not done, but as we look to refinance some of those older CDOs as they get down in terms of size, I think there will be a discount that we can refinance in that, but we’ll only probably be looking to do that upon refinancing, not as an opportunistic buy. So for example, let’s say that the AAAs are at 94, 95 or 96, we’ll say that the AAs are at 92 or 93, that’s not really that interesting to us. Steve DeLaney – JMP Securities: Right.

But if we knew that we were going to refinance and pay off all the bonds we might try to get as much of that as we could a month before we knew we were refinancing it. Steve DeLaney – JMP Securities: When you say refinance you mean like a clean up call of something?

Yeah, we’d clean it up and put the collateral either on our line or into a new CLO. Steve DeLaney – JMP Securities: Okay. Well listen, thanks for the time and the comments.

Okay. Thank you.

Our next question is from Matthew Stolzar, Pyrrho Capital. Please proceed. Matthew Stolzar – Pyrrho Capital: Hi, guys. Thank you for taking my question. You spoke about accessing the securitization market and potential sizing, but I was wondering from a timing perspective what you guys are thinking and just the general trend you’ve been seeing over the past few months.

Thanks for the question. There really hasn’t been that many deals because everybody is re-up – deals that needed to get done or people were willing to be price takers as Steve just said, got done in different structures. Now people are really ramping the next group of originations. And there are probably three or four of us that are doing that. And I would expect to see more deals in the next three to six months. But as far as any color on it maybe, Dave, you have some?

I mean there’s – the deals that were done early were permeations of old CDOs. The deals that are coming around where I mean we’re starting to see the features that as prudent managers in the past that we should have the opportunity to get in the future which is a ramp facility, an active reinvestment period. And as those, as we start seeing those more and more in the market and our collateral remains of this quality that’s really what we plan to go out with. But as Jon said there’s been a very limited universe, a bunch of small deals, but we would be I think one of the larger deals looking for the types of structures that we had in the past. Matthew Stolzar – Pyrrho Capital: Got it. And the way to think about timing I guess is your – you had said in the previous question you’re at 93 millionish of collateral that could go into a CDO. And you would look – you think it’d probably have to be 125 to 150 range.

When I was talking it, Matthew, I was talking about how much debt would be issued not total collateral. I think total collateral – you’d like to have $200 million and have a 125 bar in your line. It doesn’t – we’re starting to market these things. But to get seriously involved and start to think about really what the market looks like and spend two months working on it, I think that that’s the level we want to be at, and it’s coming very soon. Matthew Stolzar – Pyrrho Capital: Okay. Great. Thank you, guys.

Thanks.

Thank you for your question. We have no further questions at this time. (Operator Instructions). We have no further questions. Therefore, I would like to turn the call over to Mr. Jonathan Cohen for closing remarks.

Well, we thank you for your support and we look forward to continuing to hear from you, on a regular basis. So thank you.

Thank you, sir. Thank you for joining today’s conference. This concludes the presentation. You may now disconnect. Please have a very good day.