History of Resource America
Content
“…Energy is not the business of Resource America. Neither is real estate. Our true business is providing investment opportunities for the individual investor.” -Edward E. Cohen, 2001
thefactorbook.blogspot.com
History of Resource America
Founded in 1966 as SMTR Corp., an oil and natural gas company. Changed its name to Resource Exploration, Inc. in 1970. Initially focused on drilling in Ohio and Pennsylvania, but was operated out of Shreveport, Louisiana by oilman J.C. Trahan. In 1977, the company fell into distress and was taken over by Willard E. White, an Ohio oilman who also served as Vice President of Atlas Energy Co. of suburban Pittsburgh, Pennsylvania. Acquired as a penny stock in 1988 by current Chairman Edward Cohen and a group of investors, including Jack Dorrance, patriarch of the Campbell’s Soup dynasty. The group acquired a one-third stake in the company for $5.6 million. Cohen saw tax-shelter benefits and undervalued assets; became Chairman and CEO, and renamed the company Resource America, Inc. in 1989.
thefactorbook.blogspot.com
An Opportunistic Investment Vehicle
According to current CEO Jonathan Z. Cohen, Resource America specializes in seizing “opportunities that are relevant to the time.” Instead of reinvesting in the energy business in the early 1990s, Edward Cohen ranoff Resource America’s existing reserves, earning roughly $10 million in three years. He then began allocating capital to higher return investments: Acquired 54 distressed commercial real estate loans with a face value of $1.3 billion following the S&L crisis; earned roughly 35% annualized yields for the rest of the decade. Capitalized on Japan’s economic slump in the late ’90s as distressed Japanese banks liquidated their U.S. holdings in leasing and real estate. In 1995, acquired FML Leasehold for $1.4 million from Fidelity Mutual Life Insurance Co. Built into Fidelity Leasing and sold to ABN AMRO Bank for $583 million in 2000. After-tax net proceeds to Resource America: $112 million.
thefactorbook.blogspot.com
An Opportunistic Investment Vehicle
Acquired Atlas Group for $47 million in stock in 1998, when Resource America shares were trading at a historic high and the energy market was at a historic low. This dramatically expanded Resource America’s Appalachian natural gas holdings and valuable Marcellus Shale acreage. 1998: Completed the IPO of a mortgage REIT, RAIT Financial Trust (NYSE: RAS), in which Resource America became the largest shareholder at a cost of $12 million. By 2005, this investment produced over $35 million in capital gains and dividend income for Resource America. 2000: Completed the IPO of Atlas Pipeline Partners (NYSE: APL), a master limited partnership in which Resource America retained a combined 51% of the general and limited partnership interests. Entered the structured finance business in 2002 and completed the $330 million Trapeza CDO I. By the end of fiscal year 2005, the company managed $6.1 billion in structured finance assets.
thefactorbook.blogspot.com
An Opportunistic Investment Vehicle
2005: Completed the IPO of Resource Capital Corp. (NYSE: RSO), a mortgage REIT managed by Resource America. At September 30, 2006, Resource America managed $2.3 billion in assets on behalf of Resource Capital Corp. In 2005, Resource America also completed the spin off of Atlas America (NASDAQ: ATLS) to Resource America shareholders, in the form of a tax-free distribution valued at $91.4 million. By June 30, 2008, Atlas America’s market capitalization was upwards of $1.8 billion. From September 30, 1996 to September 30, 2001, assets under management (“AUM”) grew from $236 million to $1 billion; or at a 33.5% compound annual growth rate (“CAGR”). Book value grew from $26.5 million to $235 million over the same period, a nearly 55% CAGR. Excluding Resource America’s former energy subsidiary, AUM grew from $3.2 billion at September 30, 2004, to $18 billion at September 30, 2008, a 54% CAGR, reflecting the massive expansion of the company’s structured finance business.
thefactorbook.blogspot.com
thefactorbook.blogspot.com
History of Resource America
Founded in 1966 as SMTR Corp., an oil and natural gas company. Changed its name to Resource Exploration, Inc. in 1970. Initially focused on drilling in Ohio and Pennsylvania, but was operated out of Shreveport, Louisiana by oilman J.C. Trahan. In 1977, the company fell into distress and was taken over by Willard E. White, an Ohio oilman who also served as Vice President of Atlas Energy Co. of suburban Pittsburgh, Pennsylvania. Acquired as a penny stock in 1988 by current Chairman Edward Cohen and a group of investors, including Jack Dorrance, patriarch of the Campbell’s Soup dynasty. The group acquired a one-third stake in the company for $5.6 million. Cohen saw tax-shelter benefits and undervalued assets; became Chairman and CEO, and renamed the company Resource America, Inc. in 1989.
thefactorbook.blogspot.com
An Opportunistic Investment Vehicle
According to current CEO Jonathan Z. Cohen, Resource America specializes in seizing “opportunities that are relevant to the time.” Instead of reinvesting in the energy business in the early 1990s, Edward Cohen ranoff Resource America’s existing reserves, earning roughly $10 million in three years. He then began allocating capital to higher return investments: Acquired 54 distressed commercial real estate loans with a face value of $1.3 billion following the S&L crisis; earned roughly 35% annualized yields for the rest of the decade. Capitalized on Japan’s economic slump in the late ’90s as distressed Japanese banks liquidated their U.S. holdings in leasing and real estate. In 1995, acquired FML Leasehold for $1.4 million from Fidelity Mutual Life Insurance Co. Built into Fidelity Leasing and sold to ABN AMRO Bank for $583 million in 2000. After-tax net proceeds to Resource America: $112 million.
thefactorbook.blogspot.com
An Opportunistic Investment Vehicle
Acquired Atlas Group for $47 million in stock in 1998, when Resource America shares were trading at a historic high and the energy market was at a historic low. This dramatically expanded Resource America’s Appalachian natural gas holdings and valuable Marcellus Shale acreage. 1998: Completed the IPO of a mortgage REIT, RAIT Financial Trust (NYSE: RAS), in which Resource America became the largest shareholder at a cost of $12 million. By 2005, this investment produced over $35 million in capital gains and dividend income for Resource America. 2000: Completed the IPO of Atlas Pipeline Partners (NYSE: APL), a master limited partnership in which Resource America retained a combined 51% of the general and limited partnership interests. Entered the structured finance business in 2002 and completed the $330 million Trapeza CDO I. By the end of fiscal year 2005, the company managed $6.1 billion in structured finance assets.
thefactorbook.blogspot.com
An Opportunistic Investment Vehicle
2005: Completed the IPO of Resource Capital Corp. (NYSE: RSO), a mortgage REIT managed by Resource America. At September 30, 2006, Resource America managed $2.3 billion in assets on behalf of Resource Capital Corp. In 2005, Resource America also completed the spin off of Atlas America (NASDAQ: ATLS) to Resource America shareholders, in the form of a tax-free distribution valued at $91.4 million. By June 30, 2008, Atlas America’s market capitalization was upwards of $1.8 billion. From September 30, 1996 to September 30, 2001, assets under management (“AUM”) grew from $236 million to $1 billion; or at a 33.5% compound annual growth rate (“CAGR”). Book value grew from $26.5 million to $235 million over the same period, a nearly 55% CAGR. Excluding Resource America’s former energy subsidiary, AUM grew from $3.2 billion at September 30, 2004, to $18 billion at September 30, 2008, a 54% CAGR, reflecting the massive expansion of the company’s structured finance business.
thefactorbook.blogspot.com
