---

---

---

---

---

---

---

---

•	RCC Real Estate, Inc. (“RCC Real Estate”) holds real estate investments, including commercial real estate loans, commercial real estate-related securities and investments in real estate.  RCC Real Estate owns 100% of the equity of the following variable interest entities (“VIEs”):

◦	Resource Real Estate Funding CDO 2006-1 (“RREF CDO 2006-1”), a Cayman Islands limited liability company and qualified real estate investment trust (“REIT”) subsidiary (“QRS”).  RREF CDO 2006-1 was established to complete a collateralized debt obligation (“CDO”) issuance secured by a portfolio of commercial real estate loans and commercial mortgage-backed securities (“CMBS”).

◦	Resource Real Estate Funding CDO 2007-1 (“RREF CDO 2007-1”), a Cayman Islands limited liability company and QRS.  RREF CDO 2007-1 was established to complete a CDO issuance secured by a portfolio of commercial real estate loans, CMBS and property available-for-sale.

•	RCC Commercial, Inc. (“RCC Commercial”) holds bank loan investments.  RCC Commercial owns 90% and 100%, respectively of the equity of the following VIEs:

◦	Apidos CDO I, Ltd. (“Apidos CDO I”), a Cayman Islands limited liability company and taxable REIT subsidiary (“TRS”).  Apidos CDO I was established to complete a CDO issuance secured by a portfolio of bank loans and asset-backed securities (“ABS”).

◦	Apidos CDO III, Ltd. (“Apidos CDO III”), a Cayman Islands limited liability company and TRS.  Apidos CDO III was established to complete a CDO issuance secured by a portfolio of bank loans and ABS.

•	RCC Commercial II, Inc. (“Commercial II”) holds bank loan investments and commercial real estate-related securities.  Commercial II owns 100% of the equity of the following VIE:

◦	Apidos Cinco CDO, Ltd. (“Apidos Cinco CDO”), a Cayman Islands limited liability company and TRS.  Apidos Cinco CDO was established to complete a CDO issuance secured by a portfolio of bank loans and ABS.

•	Resource TRS, Inc. (“Resource TRS”), a TRS directly owned by the Company, holds the Company’s equity investment in a leasing company and holds all of its investment securities, trading.

•	Resource TRS II, Inc. (“Resource TRS II”), a TRS directly owned by the Company, holds the Company’s interests in bank loan CDOs not originated by the Company.  Resource TRS II owns 100% of the equity of the following VIE:

◦

Resource Capital Asset Management (“RCAM”), a domestic limited liability company, is entitled to collect senior, subordinated, and incentive fees related to five CDO issuers to which it provides management services through CVC Credit Partners, LLC, formerly Apidos Capital Management, a subsidiary of CVC Capital Partners SICAV-FIS, S.A., a private equity firm (“CVC”).  Resource America, Inc. owns a 33% interest in CVC Credit Partners, LLC.

•	Resource TRS III, Inc. (“Resource TRS III”), a TRS directly owned by the Company, holds the Company’s interests in a bank loan CDO originated by the Company.  Resource TRS III owns 33% of the equity of the following VIE:

---

◦	Apidos CLO VIII, Ltd (“Apidos CLO VIII”), a Cayman Islands limited liability company and TRS.  Apidos CLO VIII was established to complete a CLO issuance secured by a portfolio of bank loans.

•	Resource TRS IV, Inc. (“Resource TRS IV”), a TRS directly owned by the Company, holds the Company's investment in a hotel.

•	Resource TRS V, Inc. (“Resource TRS V”), a TRS directly owned by the Company, holds the Company's equity investment in condo complexes.

•	RSO EquityCo, LLC owns 10% of the equity of Apidos CDO I and 10% of the equity of Apidos CLO VIII.

---

---

---

---

(1)	As of September 30, 2012 and December 31, 2011, $174.2 million and $153.4 million, respectively, of securities were pledged as collateral security under related financings.

(1)	The Company expects that the maturity date of these CMBS will either be extended or the CMBS will be paid in full.

(2)

CMBS of a $6.7 million maturing in this category are collateralized by floating-rate loans and, as permitted under the CMBS terms, are expected to extend their maturities, because, beyond their contractual extensions which expired or will expire this year, the servicer may allow further extensions of the underlying floating rate loans.  The Company expects that the remaining $53.5 million of CMBS will either have their maturity date extended or be paid in full. ABS of $950,000 maturing in this category were subsequently extended until March, 2018.

---

•	the length of time the market value has been less than amortized cost;

•	the severity of the impairment;

•	the expected loss of the security as generated by a third-party valuation model;

•	original and current credit ratings from the rating agencies;

•	underlying credit fundamentals of the collateral backing the securities;

•	whether, based upon the Company’s intent, it is more likely than not that the Company will sell the security before the recovery of the amortized cost basis; and

•	third-party support for default, for recovery, prepayment speed and reinvestment price assumptions.

---

---

•	On September 6, 2012, the Company foreclosed on a self-originated loan and converted the loan to equity with a fair value of $25.5 million at acquisition. The loan was collateralized by a 179 unit hotel property in Coconut Grove, Florida. The property was 75% occupied at acquisition.

•	On June 14, 2011, the Company converted a self-originated loan to equity with a fair value of $22.4 million at acquisition.  The loan was collateralized by a 400 unit multi-family property in Memphis, Tennessee.  The property was 93.8% occupied at acquisition.

•	On June 24, 2011, the Company converted a self-originated loan to equity with a fair value of $10.7 million at acquisition.  The loan was collateralized by an office building in Pacific Palisades, California.  The property was 60% occupied at acquisition.

•	On August 1, 2011, the Company, through its subsidiary RCC Real Estate, purchased Whispertree Apartments, a 504 multi-family property located in Houston, Texas, for $18.1 million, the fair value.  The property was 95% occupied at acquisition.  In conjunction with the purchase of this property, the Company entered into a mortgage in the amount of $13.6 million.

---

(1)

Amounts include deferred amendment fees of $400,000 and $286,000 and deferred upfront fees of $360,000 and $0 being amortized over the life of the bank loans as of September 30, 2012 and December 31, 2011, respectively.  Amounts include loan origination fees of $1.6 million and $984,000 and loan extension & exit fees of $98,000 and $123,000 being amortized over the life of the commercial real estate loans as of September 30, 2012 and December 31, 2011, respectively.

(2)	Substantially all loans are pledged as collateral under various borrowings at September 30, 2012 and December 31, 2011, respectively.

(3)	Amounts include $11.2 million and $3.2 million of bank loans held for sale at September 30, 2012 and December 31, 2011, respectively.

(4)	Amount includes $34.0 million of two whole loans that are classified as a loan held for sale at September 30, 2012.

---

(1)	Whole loans had $10.1 million and $5.2 million in unfunded loan commitments as of September 30, 2012 and December 31, 2011, respectively.  These commitments are funded as the borrowers require additional funding and have satisfied the requirements to obtain this additional funding.

(2)	The total does not include an allowance for loan loss of $7.7 million and $24.2 million as of September 30, 2012 and December 31, 2011, respectively.

(3)	Maturity dates do not include possible extension options that may be available to the borrowers.

---

(4)	Floating rate whole loans include a $2.0 million portion of a whole loan that has a fixed rate of 15.0% as of September 30, 2012 and December 31, 2011, respectively.

(5)	Floating rate whole loans include a $800,000 and $302,000 preferred equity tranche of a whole loan that has a fixed rate of 10.0% as of September 30, 2012 and December 31, 2011, respectively.

(6)	Amount includes $34.0 million for two whole loans that are classified as loans held for sale at September 30, 2012.

(7)	Fixed rate mezzanine loans include a mezzanine loan that was modified into two tranches which both currently pay interest at 0.50%. In addition, the subordinate tranche accrues interest at LIBOR plus 18.50% which is deferred until maturity.

---

---

---

---

---

---

---

(1)	Whole loans include a whole loan with a pre-modification and post-modification outstanding recorded balance of $21.8 million that has been converted to real-estate owned and will no longer be a TDR after December 31, 2012.

(1)	Whole loans include a whole loan with a pre-modification and post-modification outstanding recorded balance of $21.8 million that has been converted to real-estate owned and will no longer be a TDR after December 31, 2012.

(2)	Loans receivable - related party has received paydowns in the nine months ended September 30, 2012 and currently has an outstanding balance of $7.4 million as of September 30, 2012.

---

---

(1)	Amount represents principal outstanding of $146.4 million and $159.1 million less unamortized issuance costs of $835,000 and $1.2 million as of September 30, 2012 and December 31, 2011, respectively.  This CDO transaction closed in August 2006.

(2)	Amount represents principal outstanding of $265.8 million and $318.6 million less unamortized issuance costs of $1.8 million and $2.7 million as of September 30, 2012 and December 31, 2011, respectively.  This CDO transaction closed in September 2007.

(3)	Amount represents principal outstanding of $231.8 million and $315.9 million less unamortized issuance costs of $439,000 and $1.1 million as of September 30, 2012 and December 31, 2011, respectively.  This CDO transaction closed in August 2005.

(4)	Amount represents principal outstanding of $244.9 million and $262.5 million less unamortized issuance costs of $834,000 and $1.3 million as of September 30, 2012 and December 31, 2011, respectively.  This CDO transaction closed in May 2006.

(5)	Amount represents principal outstanding of $322.0 million and $322.0 million less unamortized issuance costs of $1.6 million and $2.0 million as of September 30, 2012 and December 31, 2011, respectively.  This CDO transaction closed in May 2007.

---

(6)	Amount represents principal outstanding of $317.6 million and $303.9 million, less unamortized issuance costs of $5.1 million and $5.5 million, and less unamortized discounts of $12.8 million and $13.8 million as of September 30, 2012 and December 31, 2011, respectively.  This CDO transaction closed in October 2011.

(7)	Amount represents junior subordinated debentures issued to RCT I and RCT II in May 2006 and September 2006, respectively.

(8)

Amount represents principal outstanding of $60.8 million and $55.9 million less unamortized deferred debt costs of $91,000 and $494,000 and accrued interest costs of $31,000 and $33,000 related to CMBS repurchase facilities as of September 30, 2012 and December 31, 2011, respectively, and principal outstanding of $28.9 million less unamortized deferred debt costs of $479,000 and accrued interest costs of $57,000 related to CRE repurchase facilities as of September 30, 2012.

(9)	Amount represents principal outstanding of and $13.6 million less unamortized real estate financing costs of $0 and $65,000 as of September 30, 2012 and December 31, 2011. This real estate transaction closed in August 2011.

(10)	The securitized borrowings are collateralized by the same assets as the Apidos CLO VIII Senior Notes.

---

---

---

---

(1)	Equal to the estimated fair value of securities or loans sold, plus accrued interest income, minus the sum of repurchase agreement liabilities plus accrued interest expense.

---

(1)	Equal to the estimated fair value of securities or loans sold, plus accrued interest income, minus the sum of repurchase agreement liabilities plus accrued interest expense.

---

---

---

---

---

---

---

---

---

---

---

•

The Company manages credit risk for its derivative positions on a counterparty-by-counterparty basis (that is, on the basis of its net portfolio exposure with each counterparty), consistent with its risk management strategy for such transactions. The Company manages credit risk by considering indicators of risk such as credit ratings, and by negotiating terms in its ISDA master netting arrangements (or similar agreements) and, if applicable, any associated Credit Support Annex (“CSA”) documentation, with each individual counterparty. Credit risk plays a central role in the decision of which counterparties to consider for such relationships and when deciding with whom it will enter into derivative transactions.

---

•

Since the effective date of ASC 820, management has monitored and measured credit risk and calculated credit valuation adjustments (“CVAs”) for its derivative transactions on the basis of its relationships at the counterparty portfolio/ISDA master netting arrangement level. Management receives reports from an independent third-party valuation specialist on a monthly basis providing the CVAs at the counterparty portfolio level for purposes of reviewing and managing its credit risk exposures. Since the portfolio exception applies only to the fair value measurement and not to financial statement presentation, the portfolio-level adjustments are then allocated in a reasonable and consistent manner each period to the individual assets or liabilities that make up the group, in accordance with other applicable accounting guidance and the Company’s accounting policy elections.

•	Derivative transactions are required under ASC 815 to be measured at fair value in the statement of financial position each reporting period.

---

(1)	Negative values indicate a decrease to the associated balance sheet or consolidated statement of income line items.

---

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

---

---

(1)	Yields on these quarterly payers reflect payments for full distribution periods and in some cases, we owned the position for only a portion of that period.

---

---

(1)	Amount excludes $2.3 million and $6.6 million of interest income on bank loans on Apidos CLO VIII for three months and nine months ended September 30, 2012, respectively.  We own 43% of the outstanding subordinated debt.  The remaining 57% of the subordinated debt is owned by an unrelated third party.

---

•

An increase of $70.0 million and $55.3 million in the weighted average loan balance to $714.8 million and $692.9 million for the three and nine months ended September 30, 2012, respectively, from $644.8 million and $637.6 million for the three and nine months ended September 30, 2011, respectively, as we began to reinvest proceeds from payoffs and paydowns, classified as restricted CDO cash on our balance sheet, during the fourth quarter of 2011, with the majority of these proceeds being reinvested during the second and third quarters of 2012. In addition, we have begun to originate new loans financed by our Wells Fargo CRE credit facility coupled with new equity raised in 2012.

•

An increase in the weighted average yield to 5.74% and 5.22% during the three and nine months ended September 30, 2012, respectively, from 4.83% and 4.56% during the three and nine months ended September 30, 2011, respectively, as a result of newer real estate loans with higher stated interest rates than our legacy portfolio and as a result of an acceleration of fees on one loan that paid off in August 2012.

---

---

(1)	Amount excludes $1.2 million of interest expense and $81,000 of amortization expense, and $3.8 million of interest expense and $249,000 of amortization expense on bank loan on Apidos CLO VIII for the three and nine months ended September 30, 2012, respectively. We own 43% of the outstanding subordinated debt. The remaining 57% of the subordinated debt is owned by an unrelated third party.

•

An increase in the weighted average balance of the related financings of $204.3 million and $256.0 million for the three and nine months ended September 30, 2012, respectively, due to the closing of our new CLO, Apidos CLO VIII, which occurred in October 2011.  The increase in weighted average balance of financings from our new CLO was partially offset by the debt amortization of Apidos CDO I and Apidos CDO III as they reached the end of their reinvestment period in 2011 and 2012, respectively.  During the period July, 31, 2011 through September 30, 2012, Apidos CDO I paid down $87.8 million in principal amount of its CDO notes.  During the period from July 1, 2012 through September 30, 2012, Apidos CDO III paid down $17.6 million in principal amount of its CDO notes

•

An increase in the weighted average yield to 1.31% for both the three and nine months ended September 30, 2012, respectively, from 0.99% and 1.00% for the three and nine months ended September 30, 2011, respectively, primarily as a result of the increase in LIBOR, a reference index for the rates payable on most of these financings, and of the closing of our new CLO which had a higher comparable weighted average rate on its financings of 2.28% and 2.34% for the three and nine months ended September 30, 2012, respectively.

---

---

•

Incentive management fees to our Manager, which are based upon the excess of adjusted operating earnings, as defined in the management agreement, over a variable base rate, were $906,000 and $3.4 million for the three and nine months ended September 30, 2012, respectively, a decrease of $9,000 (1%) and and increase of $1.6 million (95%) from $915,000 and $1.7 million for the three and nine months ended September 30, 2011, respectively.  The increase in these fees during the nine months ended September 30, 2012 was primarily the result of gains on the extinguishment of debt during the three months ended June 30, 2012.  The incentive fee is calculated for each quarter and the calculation in any quarter is not affected by the results of any other quarter.

•

Base management fees increased by $312,000 (17%) and $751,000 (15%) to $2.1 million and $5.9 million for the three and nine months ended September 30, 2012, respectively, as compared to $1.8 million and $5.2 million for the three and nine months ended September 30, 2011, respectively.  These increases were due to increased stockholders’ equity, a component in the formula by which base management fees are calculated, primarily as a result of the receipt of $134.0 million of proceeds from the sales of common stock through our Dividend Reinvestment and Stock Purchase Plan or DRIP, from January 1, 2011 through September 30, 2012 as well as the receipt of $46.6 million and $55.6 million from the proceeds of our March 2011 and September 2012 secondary common stock offerings and $5.8million from the proceeds of our June 2012 preferred stock offering.

•

Incentive management fees related to our structured finance manager increased by $2.1 million (498%) and $2.5 million (144%) to $2.5 million and $4.2 million for the three and nine months ended September 30, 2012, respectively, as compared to $418,000 and $1.7 million for the three and nine months ended September 30, 2011, respectively.  The increase in fees is primarily related to the improved economic performance of this portfolio at September 30, 2012.

---

---

---

---

---

(1)

Net carrying amount includes an allowance for loan losses of $7.7 million at September 30, 2012, allocated as follows:  B notes ($207,000), mezzanine loans ($858,000) and whole loans ($6.6 million).  Net carrying amount includes an allowance for loan losses of $24.2 million at December 31, 2011, allocated as follows:  B notes ($253,000), mezzanine loans ($1.4 million) and whole loans ($22.5 million).

(2)	Net carrying amount includes allowances for loan losses of $5.1 million and $3.3 million as of September 30, 2012 and December 31, 2011, respectively.

---

(1)	Whole loans had $10.1 million and $5.2 million in unfunded loan commitments as of September 30, 2012 and December 31, 2011, respectively.  These commitments are funded as the borrowers require additional funding and have satisfied the requirements to obtain this additional funding.

(2)	The total does not include an allowance for loan loss of $7.7 million and $24.2 million as of September 30, 2012 and December 31, 2011, respectively.

(3)	Maturity dates do not include possible extension options that may be available to the borrowers.

---

(4)	Floating rate whole loans include a $2.0 million portion of a whole loan that has a fixed rate of 15.0% as of September 30, 2012 and December 31, 2011, respectively.

(5)	Floating rate whole loans include $800,000 and $302,000 of a preferred equity tranche of a whole loan that has a fixed rate of 10.0% as of September 30, 2012 and December 31, 2011, respectively.

(6)	Amount includes $34.0 million for two whole loans that are classified as loans held for sale at September 30, 2012.

(7)	Fixed rate mezzanine loans include a mezzanine loan that was modified into two tranches which both currently pay interest at 0.50%. In addition, the subordinate tranche accrues interest at LIBOR plus 18.50% which is deferred until maturity.

---

---

---

---

---

---

(1)	Whole loans include a whole loan with a pre-modification and post-modification outstanding recorded balance of $21.8 million that have been converted to real-estate owned and will no longer be a TDR after December 31, 2012.

---

(1)	Whole loans include a whole loan with a pre-modification and post-modification outstanding recorded balance of $21.8 million that have been converted to real-estate owned and will no longer be a TDR after December 31, 2012.

(2)	Loans receivable - related party has received paydowns in the nine months ended September 30, 2012 and currently has an outstanding balance of $7.4 million as of September 30, 2012

---

•	On September 6, 2012, we foreclosed on a self-originated loan and converted the loan to equity with a fair value of $25.5 million at acquisition. The loan was collateralized by a 179 unit hotel property in Coconut Grove, Florida. The property was 75% occupied at acquisition.

•	On June 14, 2011, we converted a self-originated loan to equity with a fair value of $22.4 million at acquisition.  The loan was collateralized by a 400 unit multi-family property in Memphis, Tennessee.  The property was 93.8% occupied at acquisition.

•	On June 24, 2011, we converted a self-originated loan to equity with a fair value of $10.7 million at acquisition.  The loan was collateralized by an office building in Pacific Palisades, California.  The property was 60% occupied at acquisition.

•	On August 1, 2011, we, through our subsidiary RCC Real Estate, purchased Whispertree Apartments, a 504 multi-family property located in Houston, Texas, for $18.1 million, the fair value.  The property was 95% occupied at acquisition.  In conjunction with the purchase of this property, we entered into a mortgage in the amount of $13.6 million.

---

---

---

•

In October 2011, we closed Apidos CLO VIII, a $350.0 million CLO transaction that provided financing for bank loans.  The investments held by Apidos CLO VIII collateralized $317.6 million of senior notes issued by the CDO vehicle.  Resource TRS III originally purchased a $15.0 million equity interest representing approximately 43% of the outstanding preference shares and subsequently sold $3.5 million to our subsidiary RSO Equity Co, LLC in connection with the sale of Apidos Capital Management by the Manager.  At September 30, 2012, the notes issued to outside investors had a weighted average borrowing rate of 2.28%.

•

In September 2007, we closed RREF CDO 2007-1, a $500.0 million CDO transaction that provided financing for commercial real estate loans.  The investments held by RREF CDO 2007-1 collateralized $458.8 million of senior notes issued by the CDO vehicle, of which RCC Real Estate, a subsidiary of ours, purchased 100% of the class H senior notes, class K senior notes, class L senior notes and class M senior notes for $68.0 million at closing, $5.0 million of the Class J senior notes in February 2008, an additional $2.5 million of the Class J senior notes in November 2009, and $11.9 million of the Class E senior notes, $11.9 million of the Class F senior notes and $7.3 million of the Class G senior notes in December 2009, $250,000 of the Class J senior notes in January 2010, $5.0 million of the Class A-2 senior notes in August 2011, $5.0 million of the Class A-2 senior notes in September 2011 and $50.0 million of the A1-R notes were repurchased in June 2012 by a clearing broker for us and subsequently paid off.  In addition, RREF 2007-1 CDO Investor, LLC, a subsidiary of RCC Real Estate, purchased a $41.3 million equity interest representing 100% of the outstanding preference shares. At September 30, 2012, the notes issued to outside investors, net of repurchased notes, had a weighted average borrowing rate of 0.83%.  The reinvestment period expired in June 2012 and the CDO has begun paying down the senior notes as principal is collected.  Through September 30, 2012, $2.9 million of the Class A-1 had been paid down.

•

In May 2007, we closed Apidos Cinco CDO, a $350.0 million CDO transaction that provided financing for bank loans.  The investments held by Apidos Cinco CDO collateralized $322.0 million of senior notes issued by the CDO vehicle.  RCC Commercial II holds a $28.0 million equity interest representing 100% of the outstanding preference shares.  At September 30, 2012, the notes issued to outside investors had a weighted average borrowing rate of 0.94%.

•

In August 2006, we closed RREF CDO 2006-1, a $345.0 million CDO transaction that provided financing for commercial real estate loans.  The investments held by RREF CDO 2006-1 collateralized $308.7 million of senior notes issued by the CDO vehicle.  RCC Real Estate purchased 100% of the class J senior notes and class K senior notes for $43.1 million at closing and $7.5 million of the Class F senior notes in September 2009, $3.5 million of the Class E senior note and $4.0 million of the Class F senior notes in September 2009, $20.0 million of the Class A-1 senior notes in February 2010, $4.3 million of the Class A-1 senior notes in May 2012 and $4.0 million of the Class C senior notes in May 2012.  In addition, RREF 2006-1 CDO Investor, LLC, a subsidiary of RCC Real Estate, purchased a $36.3 million equity interest representing 100% of the outstanding preference shares.  At September 30, 2012, the notes issued to outside investors, net of repurchased notes, had a weighted average borrowing rate of 1.42%.  The reinvestment period expired in September 2011 and the CDO has begun paying down the senior notes as principal is collected.  Through September 30, 2012, $29.7 million of the Class A-1 senior notes had been paid down.

---

•

In May 2006, we closed Apidos CDO III, a $285.5 million CDO transaction that provided financing for bank loans.  The investments held by Apidos CDO III collateralized $262.5 million of senior notes issued by the CDO vehicle.  RCC Commercial purchased a $23.0 million equity interest representing 100% of the outstanding preference shares.  At September 30, 2012, the notes issued to outside investors had a weighted average borrowing rate of 0.87%.  The reinvestment period expired in June 2012 and the CDO has begun paying down the senior notes as principal is collected. Through September 30, 2012, $17.6 million of the Class A-1 senior notes had been paid down.

•

In August 2005, we closed Apidos CDO I, a $350.0 million CDO transaction that provided financing for bank loans.  The investments held by Apidos CDO I collateralize $321.5 million of senior notes issued by the CDO vehicle.  RCC Commercial originally purchased a $28.5 million equity interest representing 100% of the outstanding preference shares and during the three months ended June 30, 2012 sold 10% or $2.85 million to our subsidiary RSO Equity Co, LLC in connection with the sale of CVC Credit Partners, formerly Apidos Capital Management, by the Manager.  Our subsidiary, RCC Commercial II, repurchased $2.0 million of the Class B notes in May 2012.  At September 30, 2012, the notes issued to outside investors had a weighted average borrowing rate of 1.14%.  The reinvestment period expired in July 2011 and the CDO has begun paying down the senior notes as principal is collected.  Through September 30, 2012, $87.7 million of the Class A-1 senior notes had been paid down.

---

(1)	We disclosed FFO in the comparable periods of $16.2 million and $40.2 million for the three and nine months ended September 30, 2011. Comparative AFFO data is not provided since we did not present these metrics in the comparable periods of 2011.

(2)	Amount represents gains on sales of joint venture real estate interests from a joint venture that were recorded by us.

---

(1)	Distributions on retained equity interests in CDOs (comprised of note investments and preference share ownership).

(2)	Interest coverage includes annualized amounts based on the most recent trustee statements.

(3)	Interest coverage cushion represents the amount by which annualized interest income expected exceeds the annualized amount payable on all classes of CDO notes senior to RSO’s preference shares.

(4)	Overcollateralization cushion represents the amount by which the collateral held by the CDO issuer exceeds the maximum amount required.

(5)	Apidos CDO I reinvestment period expired in July 2011.

(6)	Apidos CDO III reinvestment period expired in June 2012.

(7)	Apidos CLO VIII, which closed in October 2011, distributions include $757,000 in subordinated management fees; RSO’s 43% ownership of preference share was $15.0 million.

(8)	RREF CDO 2006-1 reinvestment period expired in September 2011.

(9)	RREF CDO 2007-1 reinvestment period expired in June 2012.

---

•	unrestricted cash and cash equivalents of $98.9 million, restricted cash of $500,000 in margin call accounts and $1.4 million in the form of real estate escrows, reserves and deposits; and

•	capital available for reinvestment in six CDO entities of $23.3 million, of which $775,000 is designated to finance future funding commitments on CRE loans, loan principal repayments that will pay down outstanding CLO notes of $41.2 million and $8.7 million in interest collections.

(1)

Contractual commitments do not include $5.8 million, $8.2 million, $6.3 million, $9.9 million, $15.9 million and $44.5 million of interest expense payable through the non-call dates of July 2010, May 2011, June 2011, August 2011 and June 2012, respectively, on Apidos CDO I, Apidos Cinco CDO, Apidos CDO III, RREF 2006-1, RREF 2007-1 and Apidos CLO VIII.  The non-call date represents the earliest period under which the CDO assets can be sold, resulting in repayment of the CDO notes.

(2)	Contractual commitments include $89,000 of interest expense payable through the maturity date of October 18, 2012 on our repurchase agreements.

(3)	Contractual commitments do not include $47.0 million and $47.7 million of interest expense payable through the maturity dates of June 2036 and October 2036, respectively, on our trust preferred securities.

(4)	Calculated only for the next 12 months based on our current equity, as defined in our management agreement.  Our management agreement also provides for an incentive fee arrangement that is based on operating performance.  Because the incentive fee is not a fixed and determinable amount, it is not included in this table.

---

---

(1)	Includes the fair value of available-for-sale investments that are sensitive to interest rate change.

•	monitoring and adjusting, if necessary, the reset index and interest rate related to our mortgage-backed securities and our borrowings;

•	attempting to structure our borrowing agreements for our CMBS to have a range of different maturities, terms, amortizations and interest rate adjustment periods; and

•	using derivatives, financial futures, swaps, options, caps, floors and forward sales, to adjust the interest rate sensitivity of our fixed-rate commercial real estate mortgages and CMBS and our borrowing which we discuss in “Financial Condition-Hedging Instruments.”

---

---

(1)	Filed previously as an exhibit to the Company’s registration statement on Form S-11, Registration No. 333-126517.

(2)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.

(3)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

(4)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on July 3, 2008.

(5)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 20, 2009.

(6)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.

(7)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

(8)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 19, 2010.

(9)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on January 6, 2011.

(10)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

(11)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on March 2, 2011

(12)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on March 20, 2012.

(13)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on July 7, 2011.

(14)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on March 2, 2012.

(15)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 13, 2012.

(16)	Filed previously as an exhibit to the Company’s registration statement on Form 8-A filed on June 8, 2012.

(17)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 29, 2012.

(18)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on September 28, 2012.

(19)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on March 2, 2012.

(20)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on June 29, 2012.

---