Good morning and thank you for joining the Resource Capital Corporation Earnings Conference Call for the First Quarter ended March 31, 2018. Before we begin, I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. 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 based on management's current expectations and beliefs and are subject to a number of trends, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in the company's report filed with the SEC, including its report on forms 8-K, 10-Q and 10-K, and in particular, the Risk Factor section of our Form 10-K. 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. Furthermore, certain non-GAAP financial measures will be discussed on this conference call. Our presentation of this information is not intended to be considered in isolation or as a substitute to the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with the generally accepted accounting principles can be accessed through our filings with the SEC at www.sec.gov. I would now turn it over to the Chairman of RSO, Andrew Farkas for opening remarks.

Good morning, everybody, and thank you for joining us. With me today are Bob Lieber, our CEO; Matt Stern, our President; Dave Bryant, CFO; Paul Hughson, Head of Commercial Real Estate Lending; and Andy Karr, who is Head of Investor Relations. When we took over management at Resource Capital Corp. in 2016, we embarked on a strategic plan, to reposition the business into commercial real estate investment vehicle capable of producing sustainable core earnings and delivering long-term shareholder value. While this process has required some difficult measures, I’m pleased to report that 18 months later, the strategic plan is substantially complete. We are now down to only $63 million of the original $480 million of non-core assets we wanted to sell. Of the remaining 63 million, 57 million are legacy commercial real estate loans. Having resolved over $50 billion of similar loans in the past eight years through C-III special servicing business, we believe the best course of action with these legacy loans is to take the necessary time to work them out to achieve maximum proceeds for our investors. With the strategic plan now largely complete and increased visibility into earnings, we expect to increase the company’s quarterly dividend to $0.10 per share in the second quarter. This is a 100% increase in our quarterly common dividend since the inception of this strategic plan. We expect future dividend policy to be informed by the company’s improving core earnings profile. We continue to leverage C-III’s expertise in commercial real estate credit to refocus the company’s investment portfolio. In the last 18 months, nearly $800 million of transitional commercial real estate loans have been originated, which is a significant achievement, considering that Resource Capital Corp.’s pipeline came to an absolute halt before we acquired its manager in September 2016. Over $265…

Thank you, Andrew, and good morning, everybody. As Andrew mentioned, the focus of the company is now shifting from the execution of our strategic plan to growing core earnings. Adjusted core earnings turned positive this quarter for the first time since we announced the strategic plan back in September 2016 to $0.03 a share in the first quarter of 2018, adjusting for charges related to the redemption of our Series B preferred shares and settlement of legacy litigation. While executing the strategic plan over the past year, adjusted core earnings have trended from negative $0.10 in the second quarter of 2017 to a negative $0.09 in the third quarter of 2017 and a negative $0.01 in the fourth quarter of 2017, and as I said $0.03 positive in the first quarter of 2018. So the trend line is good. This trend in the underlying business is causing the earnings power of the company to accelerate and our near-term earnings outlook supported an anticipated increase in the second quarter dividend. As we move forward, any further dividend adjustments will generally be informed by core earnings and as core earnings visibility improves, we will continue to discuss dividend policy with our Board. As we previously discussed, the completion of the preferred stock repurchase will increase core earnings by $0.11 per quarter which will be fully realized for the first time beginning in the second quarter of 2018. We originated 146 million of CRE loans in the first quarter of 2018. We succeeded loan payoffs for a net deployment of $92 million. We expect this positive deployment to continue to help increase the earnings power of the CRE loan book starting in the second quarter. Additionally, we acquired 44 million of CMBS this quarter for net deployment of $41 million. As we look…

Thank you, Bob, and good morning, everyone. I’d like to begin by taking a closer look at the origination and investment activity that Andrew and Bob alluded to earlier. In the first quarter of 2018, we closed on 146 million of transitional CRE loan commitments with a weighted average spread of 394 basis points over a 30-day LIBOR. At March 31, 2018, our commercial real estate loan portfolio is comprised of 1.4 billion of floating rate self-originated home loans. As a floating rate lender and like many of our competitors, our earnings benefit from increases in short-term interest rates. Our CRE loan origination team continues to see improved deal flow and despite a competitive market, we are optimistic that the recent growth in our origination volume should continue and that 2018 guidance provided on our last earnings call can be achieved. Turning to our CMBS portfolio. We acquired 44 million in face amount of CMBS bonds during the first quarter of 2018. Among other investments, these investments included tranches of a Freddie Mac K-Series transaction and a single asset, single borrower deal with a strong sponsor in an attractive asset class. One of C-III’s core competencies is underwriting real estate credit and identifying good risk adjusted returns throughout the capital stack of CMBS trusts. We believe CMBS investments provide attractive risk adjusted yields while adding meaningful diversification and duration to the company’s portfolio. While we anticipate transitional commercial real estate loans will continue to be substantial majority of the asset base for Exantas Capital, we continue to explore investment opportunities that can deliver sustainable and predictable earnings streams and enhance value for our shareholders. We believe it to be prudent for an open end, stable income-oriented investment vehicle such as Exantas Capital to supplement its loan portfolio with some longer…

Thank you, Matt, and good morning. Our GAAP net loss allocable to common shares for the three months ended March 31st was 12.6 million or $0.40 per share. Our net loss for the first quarter includes the following significant items. A net loss of 7.5 million on the redemption of our remaining Series B preferred stock which represents the difference between the redemption value and the carrying value of the preferred stock we redeemed. A 4.5 million decline in the fair value of a CRE loan which is included in the strategic plan. And a net loss of 700,000 from non-core assets included in the strategic plan. These non-recurring and/or non-core adjustments totaled 12.7 million or $0.41 per share. Our core earnings for the three months ended March 31, 2018 was a loss of 8.6 million or $0.28 per share. Our net loss for the first quarter includes the following significant and nonrecurring items. The after-mentioned net loss of 7.5 million or $0.24 per share on the completed redemption of our Series B preferred stock and a net loss of 2.2 million or $0.07 per share from the pending settlement of a lawsuit which was accrued in 2017. When we adjust core earnings for these nonrecurring items that total $0.31, our adjusted core earnings per share are $0.03 per share for the first quarter of 2018, up from adjusted core of a minus $0.01 per share in the fourth quarter of 2017. We expect our core earnings run rate to increase with additional equity deployed in our core commercial real estate credit investment platform and we will see incremental savings of $0.08 per share in the second quarter when we realize the full impact of our preferred share redemptions. As a reminder, the full impact of the preferred share redemptions…

Thanks, Dave. We look forward to updating you all on our progress as we attend upcoming conferences under the rebranded Exantas Capital name and discuss the results of our investment efforts on future calls. We appreciate your time and your interest here this morning. And with that, I’ll ask the operator to open up the call to any potential questions.

[Operator Instructions]. Our first question comes from the line of Steve DeLaney from JMP Securities. Your line is now open.

Good morning, everyone. First comment is love the new name. I hope it steers you to calm waters and fair winds. If we could get a little more color on the first quarter originations, maybe just the number of loans, anything unique about the GO or property type in that group of loans? Thank you.

Sure. It was 146 million in total, was nine investments in the aggregate and majority in the multi-family side, but there was some diversity there as well.

Okay, that’s helpful. Thank you very much. And I guess shifting, you talked a little bit about the new facility and it looks like there’s approximately 150 million of capital available. How should we think about that and your pipeline that you’re currently seeing? It would seem that you have maybe somewhere between 500 million and 600 million of additional lending capacity on a net basis and maybe pushed the portfolio up to somewhere just under 2 billion. Am I think – I know they’re very rough metrics, but do you guys see your balance sheet having that kind of capacity for loan growth?

I think from a liquidity perspective, I think that’s largely correct, Steve. So we have the 60 million or so on balance sheet and then incremental liquidity is as Dave had mentioned. When we deploy that, I think the aggregate incremental assets are correct and then we would probably be at what we would say is a more appropriate targeted leverage level for the business. So we do expect, as Dave mentioned, to see the asset base grow and that’s partially – not partially, that’s the primary driver of core earnings growth is that net deployment which we do anticipate.

Makes sense, sure. Okay, that’s helpful for modeling purposes. And then anything – your repayments are always a challenge and I really do appreciate your comments about CMBS and triple net lease. I think some duration mixed in is very helpful. To that end, do you see anything lumpy or big up there that you do expect in terms of sizable repayments or just the smaller loan size for your portfolio kind of prevent that type of quarter-to-quarter surprise and re-pace?

We certainly don’t see anything looking out that is disproportionate. But as you know, repayments are difficult to predict in the aggregate. We have a normal maturity flow profile and we’ll expect that to smooth out over time as we get to a normal run rate origination for the business. But we don’t see something disproportionate at least that we anticipate right now.

Great. Well, thank you very much for the comments.

Thanks, Steve.

Our next question comes from the line of Ben Zucker from BTIG. Your line is open.

Good morning guys and thanks for taking my questions. Can we talk for a second about the preferred equity investment that you guys made? Was that just a one-off type of investment or do you plan to look at more pref equity and other types of subordinate debt?

Yes, the preferred investment really was effectively like a mezzanine investment or just the junior part of the capital stack on a property that we wanted to make a loan to. We thought it had an attractive return profile and was more of a structuring matter than anything else. While I don’t know that it would become a disproportionate part of the asset base certainly as we work with borrowers, we’ll evaluate opportunities to earn excess yield when we like the credit.

And I would just add to that that we are – we focus on real estate credit and there are lots of different places you can play in the capital stack for that and the preferred equity presents those opportunities as well.

I hear you there and I guess that’s a benefit of being kind of a diversified smaller lender and not a bank. And I also heard you mentioned potentially pursuing some of the net lease investments. Could you expand on that a little? Is that something that the C-III platform can help you identify an expertise of C-III? I think those of us on the call understand the duration that net lease can provide, so I think we’d welcome seeing them in the portfolio.

Yes, it’s something that we continue to evaluate and are looking into many of the skill sets in terms of identifying the investment opportunities, the credit underwriting skill set we do think is housed within C-III and think it could present an opportunity, as I mentioned, from a duration perspective and provide the ROE profile and visibility that we want from an earnings perspective. But it’s something that we continue to look at and evaluate. But as we’ve concurred, we thought it warranted mentioning.

Got you and appreciate that. And is there any reason that your pace of sales on the discontinued assets really seem to pick up in the last five weeks or so? And as a follow up, could you quickly review the status, like the loan quality of reserves, et cetera, for the remaining legacy CRE loans held for sale that basically make up all of your discontinued operations at this point?

In terms of the pickup, I don’t know that there is specifically causation for that. Certainly in some cases, we are awaiting until just the end of the year just in terms of planning some of the divestitures but not necessarily in the last few weeks. In terms of the reserve profile, we continue to work through the loans that remain on the book. And as we’re working through that, it’s difficult to provide specifics to those resolutions. But we feel as though we have taken appropriate reserves based on appraisals, et cetera, that we have received or obtained and continue to work through the remaining assets.

Got you. And lastly and just a bit of housekeeping, that asset held for sale that had the 4 million write-down on fair value, is that an asset that’s still on your books or was that one of the one sold subsequent to quarter end?

That is still on our books, Ben.

Perfect. Thanks. All right, well, congrats on the continued progress and the dividend increase, guys.

Thank you.

At this time, I’m showing no further questions. I would like to turn the call back over to Andrew Farkas for any closing remarks.

So I just want to say to everybody that we greatly appreciate you having followed and continue to support the company. I believe fervently that everything we said that we would do has been executed within the timeframes we said they’d be executed. And as far as we are concerned, the progress that as we continue to make and the steps that we have taken to continue that progress are again entirely consistent with what it was we said that we would do. At C-III and now with Exantas, that’s really our brand which is we will always execute on the plans that we tell you we’re going to execute on. I’m really very proud of what the management team has accomplished here and I think we can look forward to continued results as we proceed along the plan we’ve articulated. With that, I’ll say thank you once again. And we will be in touch with you in the next quarter. Thank you.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program. You may all disconnect. Everyone, have a great day.