SEC Company Response from ACRES Commercial Realty Corp. (ACR, ACR-PC, ACR-PD) (CIK 0001332551) (ACR) — Oct 14, 2005
ACRES Commercial Realty Corp. (ACR, ACR-PC, ACR-PD) (CIK 0001332551)
Date: Oct. 14, 2005 · CIK: 0001332551 · Accession: 0000950116-05-003199
AI Filing Summary & Sentiment
File numbers found in text: 333-126517
Referenced dates: September 21, 2005
Letter
Securities and Exchange Commission Amendment No. 1 to Registration Statement on Form S-11 Filed August 29, 2005 File No. 333-126517
Re: Resource Capital Corp.
Dear Ms. Wolff:
On behalf of Resource Capital Corp. (the “Company”), we wish to respond to your comment letter dated September 21, 2005 concerning the above-referenced filing. For your convenience, we first restate your comment in italics and then provide our response. Internal page references are to the Edgar version of Amendment No. 2 to the registration statement.
We are enclosing four courtesy copies, in both clean and blacklined form, of the amended registration statement.
General
1. We note your response to comment no. 1. In your response at n.6, you state that current or future CDOs may rely on Investment Company Act Sections 3(c)(1), 3(c)(7) or 3(c)(5)(C) for an exclusion from the definition of “investment company.”
•
Please specify the exclusion(s) that Ischus CDO II, Ltd. and Apidos CDO I, Ltd. are relying upon. To the extent that a CDO relies on Section 3(c)(1), please note that any investment in it by a 3(c)(7) investor may cause that CDO to lose the benefit of that exclusion. See Section 3(c)(1)(A). Please explain what procedures you will implement to avoid that possible result.
•
To the extent that either or both of the named CDOs rely, or intend to rely, on Section 3(c)(7), please explain why entities investing in the CDOs (or in any future CDO relying on Section 3(c)(7)), including RCC Commercial Inc., are, or will be, “qualified purchasers” under Section 2(a)(51) of the Investment Company Act. Your explanation should include a factual and legal discussion of whether such entities were “formed for the specific purpose of acquiring the securities offered,” and, if they were so formed, how they nevertheless meet the definition of qualified purchaser under Section (2)(a)(51).
Securities and Exchange Commission
October 14, 2005
Page 2 of 16
•
To the extent that either or both CDOs rely, or intend to rely, on Section 3(c)(5)(C), or that you envision future CDOs as relying on this exclusion, please explain the basis for such reliance.
The Company has advised us that Ischus CDO II, Ltd. and Apidos CDO I, Ltd. are relying on Investment Company Act Section 3(c)(7) for exclusion from the definition of “investment company.” The Company does not now anticipate that future CDOs will rely on Section 3(c)(1). However, were any to do so, the Company notes that 100% of the voting securities of any such CDO would be owned by either RCC Real Estate or RCC Commercial, which are, in turn, owned 100% by the Company. As discussed in the next paragraph, the Company is itself a qualified purchaser. As discussed in our response to your prior comment no. 1, RCC Real Estate is excluded from the definition of “investment company” by Section 3(c)(5)(c) or Section 3(c)(6) and, as a result, the look-through provision of Section 3(c)(1)(A) would not apply. While RCC Commercial will rely on the Section 3(c)(7) exclusion (i.e., the look-through provision would apply), it is 100% owned by the Company which, as discussed in our response to your prior comment no. 1, does not come within the definitions of an investment company in Section 3(a)(1). Accordingly, because the ultimate beneficial owner of each CDO would be a single entity which is a qualified purchaser that is not an investment company and is not relying on the Section 3(c)(1) or Section 3(c)(7) exclusions the Section 3(c)(1) requirements would be met.
Under the terms of the CDO offerings, all of the investors factually meet the requirements for being “qualified purchasers” under Section 2(a)(51). In the case of each investor in a CDO other than RCC Real Estate and RCC Commercial, the investor will be required to represent in an investor questionnaire that it is a qualified purchaser. In the case of RCC Real Estate and RCC Commercial, either (i) each has or will have at least $25 million in investments at the time in invests in a CDO or (ii) the sole beneficial owner of each (i.e., the Company) is and will be a qualified purchaser at the time the relevant entity invests in a CDO.
Securities and Exchange Commission
October 14, 2005
Page 3 of 16
Neither RCC Real Estate nor RCC Commercial were “formed for the specific purpose of acquiring” the securities of the CDOs. Rather, as described in Note 2 to the table in “Summary – Our Formation and Structure,” at page 19, RCC Real Estate was formed for the purpose of holding the Company’s commercial and residential real estate-related assets and RCC Commercial was formed for the purpose of holding the Company’s commercial finance assets. As noted in the release that adopted Rule 2a51-3, the rule was designed to limit “the possibility that a company will be able to do indirectly what it is prohibited from doing directly (i.e. organize a qualified purchaser entity for the purpose of making an investment in a particular Section 3(c)(7) Fund available to investors that themselves did not meet the definition of qualified purchaser).” Inv. Co. Act Release No. 22597, Section II.C (April 3, 1997). Since both RCC Real Estate and RCC Commercial were organized to hold a broad array of the Company’s assets and not simply the assets of one specific Section 3(c)(7) CDO, neither has been formed for “the specific purpose” of acquiring the securities of a particular Section 3(c)(7) CDO. Moreover, even if RCC Real Estate and RCC Commercial had been formed for the specific purpose of investing in a particular Section 3(c)(7) CDO, Rule 2a51-3 provides that they could nonetheless be qualified purchasers if each beneficial owner of their securities is a qualified purchaser. The sole beneficial owner of all the securities of each of RCC Real Estate and RCC Commercial is the Company, which has over $1.854 billion in investments and, consequently, is itself a qualified purchaser. The Company was not formed for the specific purpose of investing in any one CDO and, therefore, it is not necessary to look through to the Company’s stockholders. Accordingly, under Rule 2a51-3, each of RCC Real Estate and RCC Commercial would be a qualified purchaser.
Finally, neither of the existing CDOs relies or intends to rely on Section 3(c)(5)(C), and the Company does not now expect future CDOs will rely upon this exclusion.
2. We note from your response to comment no. 3 that “[e]ven if the Manager is deemed to be taking shares or options with a view towards distribution and, as a result, may be deemed to be an underwriter, because the distribution would not be a public distribution and would be made only to persons who are insiders, the issuance by the Company of its shares of common stock will be exempt from the registration requirements of the Securities Act under Section 4(2) of the Securities Act or the ‘Section 4(1½) exemption’ if the transaction is considered a resale.” Please tell us the basis for your conclusion that the distribution would not be a “public distribution” and would be made only to “insiders.” For example, please tell us how the approximately 146 employees of Resource America would be considered to be insiders and whether a distribution could be made to all employees.
The Company does not believe that the allocations would be considered “public distributions” because the recipients are, and will continue to be, a limited number of persons who are directors, officers and employees of the Manager or of Resource America or its subsidiaries who provide management and other services to the Company. Since all of such persons are involved in providing services to the Company, all have pre-existing relationships with it. Moreover, not all 146 Resource America employees involved in asset management will be eligible to receive allocations: management support personnel and junior asset management personnel will not be eligible. As of the date of this letter, the Company believes that approximately 40 individuals are eligible to receive allocations, approximately 16 of which are accredited investors.
Securities and Exchange Commission
October 14, 2005
Page 4 of 16
Cover
3. We note your response to comment no. 8 and continue to believe that your disclosure on the cover page that “you intend to apply” to have your common stock listed on the NYSE is not appropriate until you have applied for listing and can so state. As a result, we reissue the comment.
The Company has received approval, subject to official notice of issuance, to list its common stock on the New York Stock Exchange. Accordingly, the Company has revised the statement on the cover page to state that it has received such approval.
4. We note your response to comment no. 9 and the revised disclosure. Please revise to briefly identify the “other restrictions on ownership and transfer” to which you refer on the cover page and delete the cross-reference to the section on “Description of Capital Stock” from the cover page.
The Company has revised the statement on the cover page to identify the restrictions on ownership and transfer of the Company’s common stock that are contained in the Company’s charter. The cross reference has been deleted.
Summary, page 1
Our Company, page 1
5. We note your response to comment no. 16 and the revised disclosure. We further note your disclosure on page 8 that you expect your agency RMBS to provide a “stable foundation” and you expect your other investments to provide “enhanced returns and limited interest rate risk.” We continue to believe that your statement that your objective is to provide attractive risk-adjusted returns should be balanced by disclosure immediately following this statement throughout the prospectus, including pages 1 and 8, that makes clear that future distributions and capital appreciation are not guaranteed and your ability to achieve this objective is not based on your operating history or REIT experience, which is limited. As a result, we reissue that portion of the comment. Further, we note your statement that risk-adjusted returns are returns earned on assets normalized for the amount of risk associated with the assets. Please expand your disclosure to clarify what you mean by “normalize” a return for risk. If there is a formula or other criteria for “normalizing” risk, please so state.
Securities and Exchange Commission
October 14, 2005
Page 5 of 16
The Company has revised its disclosure at pages 1, 9, 53, 76 and 79 to provide the requested cautionary language and has revised the definition of “risk-adjusted returns.”
Our investment portfolio, page 3
6. We note your disclosure that the underlying residential borrowers of your non-agency RMBS can be characterized as “sub-prime.” Please include risk factor disclosure regarding the risks associated with sub-prime lending.
The Company has added a summary risk factor on page 7 and a risk factor on page 29 to disclose the risks associated with sub-prime lending.
Business Strengths, page 6
7. We note your response to comment no. 27 and the revised disclosure. We continue to believe that you should expand your disclosure on page 6 to identify the specific relationships or investments and state that you have not executed any sourcing agreements. As a result, we reissue that portion of the comment.
The Company has added the requested disclosure on page 6.
Summary Risk Factors, page 6
8. We note that you leverage your investments and are not limited in the amount of leverage that you use. Please expand your disclosure on page 7 to quantify your current leverage.
The Company has modified the referenced summary risk factor, at page 7, to quantify its leverage. A conforming change has been made to the risk factor at page 25.
External Manager, page 9
9. We note your response to comment no. 25 and the revised disclosure. We continue to believe that you should state that Resource Capital Manager has no employees and that neither you nor your manager will have any independent officers, and we reissue that portion of the comment.
The Company has revised the disclosure as requested at pages 9 and 10, and has provided similar disclosure under “Business – The Manager” at page 85.
10. We note your response to comment no. 26 and the revised disclosure that senior management and other personnel allocate their time between you and Resource America based on the relative amount of assets managed on your behalf and on behalf of Resource America. Please expand your disclosure to clarify what you mean by this statement and disclose the amount of time your senior management team and these employees will devote to you.
The Company has revised the disclosure as requested at page 10.
Securities and Exchange Commission
October 14, 2005
Page 6 of 16
11. We note your statement that Ischus has “one CDO with $400 million in assets on a cost basis and $321 million of assets that have been accumulated on our behalf for Ischus CDO II” and your statement that Apidos has over “$189 million in par value of syndicated bank loans, $155 million of which have been accumulated on our behalf for Apidos CDO I.” Please expand your disclosure in the summary and the Business section to briefly describe your interests in each CDO and clarify what you mean by assets that have been “accumulated on our behalf.”
After June 30, 2005, the Company closed the two CDOs, Ischus CDO II and Apidos CDO I, for which assets had been accumulating in warehouse lines. The Company has updated its disclosure in the summary at page 10 concerning Ischus and Apidos accordingly. The Company has also added a description of its interests in the CDOs. Conforming changes have been made in “Business” at page 86.
12. We note that 5% of Resource Real Estate’s assets are managed on your behalf. Please expand your disclosure in the summary and the Business section to briefly describe these assets and your investment in Resource Real Estate.
The assets previously referred to are solely assets owned by the Company that are managed for the Company by Resource Real Estate pursuant to the management agreement. The Company does not have an investment in Resource Real Estate itself.
Conflicts of Interest in our Relationship with the Manager and Resource America, page 10
13. We note your disclosure in the third ballet point that the management agreement does not prohibit your investment in investments in which the Manager has an interest and that you anticipate that you will invest in equity portions of CDO’s structured for you by the Manager. Please revise to disclose that you have already invested in two CDO’s structured by your Manager, that you have invested in real estate or real estate loans originated or financed, as the case may be, by your Manager, and that you will purchase equipment leases originated by, and to be managed by, your Manager.
Securities and Exchange Commission
October 14, 2005
Page 7 of 16
The Company has revised the third bullet point in the summary at page 11 and in “Management” at page 110 to provide the requested disclosure about the two CDOs and about future investments in real estate loans and equipment leases originated and managed by the Manager and Resource America. The Company has not invested in any real estate loans structured by the Manager; all real estate loans in the Company’s portfolio have been acquired from third party originators found by the Manager. Accordingly, no reference has been made to any current portfolio loans originated by the Manager.
Our Financing Strategy, page 12
14. We note your response to comment no. 29 and the revised disclosure including the table on page 5. Please expand your disclosure on page 12
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CORRESP
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filename1.htm
Prepared and filed by St Ives Financial
October 14, 2005
VIA: OVERNIGHT MAIL
Securities and Exchange Commission
Washington, D.C. 20549-0405
Attn: Elaine Wolff, Branch Chief
Re:
Resource Capital Corp.
Amendment No. 1 to Registration Statement on Form S-11
Filed August 29, 2005
File No. 333-126517
Dear Ms. Wolff:
On
behalf of Resource Capital Corp. (the “Company”), we wish to
respond to your comment letter dated September 21, 2005 concerning the above-referenced
filing. For your convenience, we first restate your comment in italics and
then provide our response. Internal page references are to the Edgar version
of Amendment No. 2 to the registration statement.
We are enclosing four courtesy copies, in both clean and blacklined form, of the amended registration statement.
General
1.
We note your response to comment no. 1. In your response at n.6, you state that current or future CDOs may rely on Investment Company Act Sections 3(c)(1), 3(c)(7) or 3(c)(5)(C) for an exclusion from the definition of “investment company.”
•
Please specify the exclusion(s) that Ischus CDO II, Ltd. and Apidos CDO I, Ltd. are relying upon. To the extent that a CDO relies on Section 3(c)(1), please note that any investment in it by a 3(c)(7) investor may cause that CDO to lose the benefit of that exclusion. See Section 3(c)(1)(A). Please explain what procedures you will implement to avoid that possible result.
•
To the extent that either or both of the named CDOs rely, or intend to rely, on Section 3(c)(7), please explain why entities investing in the CDOs (or in any future CDO relying on Section 3(c)(7)), including RCC Commercial Inc., are, or will be, “qualified purchasers” under Section 2(a)(51) of the Investment Company Act. Your explanation should include a factual and legal discussion of whether such entities were “formed for the specific purpose of acquiring the securities offered,” and, if they were so formed, how they nevertheless meet the definition of qualified purchaser under Section (2)(a)(51).
Securities and Exchange Commission
October 14, 2005
Page 2 of 16
•
To the extent that either or both CDOs rely, or intend to rely, on Section 3(c)(5)(C), or that you envision future CDOs as relying on this exclusion, please explain the basis for such reliance.
The Company has advised us that Ischus CDO II, Ltd. and Apidos CDO I, Ltd. are relying on Investment Company Act Section 3(c)(7) for exclusion from the definition of “investment company.” The Company does not now anticipate that future CDOs will rely on Section 3(c)(1). However, were any to do so, the Company notes that 100% of the voting securities of any such CDO would be owned by either RCC Real Estate or RCC Commercial, which are, in turn, owned 100% by the Company. As discussed in the next paragraph, the Company is itself a qualified purchaser. As discussed in our response to your prior comment no. 1, RCC Real Estate is excluded from the definition of “investment company” by Section 3(c)(5)(c) or Section 3(c)(6)
and, as a result, the look-through provision of Section 3(c)(1)(A) would not apply. While RCC Commercial will rely on the Section 3(c)(7) exclusion (i.e., the look-through provision would apply), it is 100% owned by the Company which, as discussed in our response to your prior comment no. 1, does not come within the definitions of an investment company in Section 3(a)(1). Accordingly, because the ultimate beneficial owner of each CDO would be a single entity which is a qualified purchaser that is not an investment company and is not relying on the Section 3(c)(1) or Section 3(c)(7) exclusions the Section 3(c)(1) requirements would be met.
Under the terms of the CDO offerings, all of the investors factually meet the requirements for being “qualified purchasers” under Section 2(a)(51). In the case of each investor in a CDO other than RCC Real Estate and RCC Commercial, the investor will be required to represent in an investor questionnaire that it is a qualified purchaser. In the case of RCC Real Estate and RCC Commercial, either (i) each has or will have at least $25 million in investments at the time in invests in a CDO or (ii) the sole beneficial owner of each (i.e., the Company) is and will be a qualified purchaser at the time the relevant entity invests in a CDO.
Securities and Exchange Commission
October 14, 2005
Page 3 of 16
Neither RCC Real Estate nor RCC Commercial were “formed for the specific purpose of acquiring” the securities of the CDOs. Rather, as described in Note 2 to the table in “Summary – Our Formation and Structure,” at page 19, RCC Real Estate was formed for the purpose of holding the Company’s commercial and residential real estate-related assets and RCC Commercial was formed for the purpose of holding the Company’s commercial finance assets. As noted in the release that adopted Rule 2a51-3, the rule was designed to limit “the possibility that a company will be able to do indirectly what it is prohibited from doing directly (i.e. organize a qualified purchaser entity for the purpose of making an
investment in a particular Section 3(c)(7) Fund available to investors that themselves did not meet the definition of qualified purchaser).” Inv. Co. Act Release No. 22597, Section II.C (April 3, 1997). Since both RCC Real Estate and RCC Commercial were organized to hold a broad array of the Company’s assets and not simply the assets of one specific Section 3(c)(7) CDO, neither has been formed for “the specific purpose” of acquiring the securities of a particular Section 3(c)(7) CDO. Moreover, even if RCC Real Estate and RCC Commercial had been formed for the specific purpose of investing in a particular Section 3(c)(7) CDO, Rule 2a51-3 provides that they could nonetheless be qualified purchasers if each beneficial owner of their securities is a qualified
purchaser. The sole beneficial owner of all the securities of each of RCC Real Estate and RCC Commercial is the Company, which has over $1.854 billion in investments and, consequently, is itself a qualified purchaser. The Company was not formed for the specific purpose of investing in any one CDO and, therefore, it is not necessary to look through to the Company’s stockholders. Accordingly, under Rule 2a51-3, each of RCC Real Estate and RCC Commercial would be a qualified purchaser.
Finally, neither of the existing CDOs relies or intends to rely on Section 3(c)(5)(C), and the Company does not now expect future CDOs will rely upon this exclusion.
2.
We note from your response to comment no. 3 that “[e]ven if the Manager is deemed to be taking shares or options with a view towards distribution and, as a result, may be deemed to be an underwriter, because the distribution would not be a public distribution and would be made only to persons who are insiders, the issuance by the Company of its shares of common stock will be exempt from the registration requirements of the Securities Act under Section 4(2) of the Securities Act or the ‘Section 4(1½) exemption’ if the transaction is considered a resale.” Please tell us the basis for your conclusion that the distribution would not be a “public distribution” and would be made only to
“insiders.” For example, please tell us how the approximately 146 employees of Resource America would be considered to be insiders and whether a distribution could be made to all employees.
The Company does not believe that the allocations would be considered “public distributions” because the recipients are, and will continue to be, a limited number of persons who are directors, officers and employees of the Manager or of Resource America or its subsidiaries who provide management and other services to the Company. Since all of such persons are involved in providing services to the Company, all have pre-existing relationships with it. Moreover, not all 146 Resource America employees involved in asset management will be eligible to receive allocations: management support personnel and junior asset management personnel will not be eligible. As of the date of this letter, the Company believes that approximately 40
individuals are eligible to receive allocations, approximately 16 of which are accredited investors.
Securities and Exchange Commission
October 14, 2005
Page 4 of 16
Cover
3.
We note your response to comment no. 8 and continue to believe that your disclosure on the cover page that “you intend to apply” to have your common stock listed on the NYSE is not appropriate until you have applied for listing and can so state. As a result, we reissue the comment.
The Company has received approval, subject to official notice of issuance, to list its common stock on the New York Stock Exchange. Accordingly, the Company has revised the statement on the cover page to state that it has received such approval.
4.
We note your response to comment no. 9 and the revised disclosure. Please revise to briefly identify the “other restrictions on ownership and transfer” to which you refer on the cover page and delete the cross-reference to the section on “Description of Capital Stock” from the cover page.
The Company has revised the statement on the cover page to identify the restrictions on ownership and transfer of the Company’s common stock that are contained in the Company’s charter. The cross reference has been deleted.
Summary, page 1
Our Company, page 1
5.
We note your response to comment no. 16 and the revised disclosure. We further note your disclosure on page 8 that you expect your agency RMBS to provide a “stable foundation” and you expect your other investments to provide “enhanced returns and limited interest rate risk.” We continue to believe that your statement that your objective is to provide attractive risk-adjusted returns should be balanced by disclosure immediately following this statement throughout the prospectus, including pages 1 and 8, that makes clear that future distributions and capital appreciation are not guaranteed and your ability to achieve this objective is not based on your operating history or REIT experience, which is limited. As a
result, we reissue that portion of the comment. Further, we note your statement that risk-adjusted returns are returns earned on assets normalized for the amount of risk associated with the assets. Please expand your disclosure to clarify what you mean by “normalize” a return for risk. If there is a formula or other criteria for “normalizing” risk, please so state.
Securities and Exchange Commission
October 14, 2005
Page 5 of 16
The Company has revised its disclosure at pages 1, 9, 53, 76 and 79 to provide the requested cautionary language and has revised the definition of “risk-adjusted returns.”
Our investment portfolio, page 3
6.
We note your disclosure that the underlying residential borrowers of your non-agency RMBS can be characterized as “sub-prime.” Please include risk factor disclosure regarding the risks associated with sub-prime lending.
The Company has added a summary risk factor on page 7 and a risk factor on page 29 to disclose the risks associated with sub-prime lending.
Business Strengths, page 6
7.
We note your response to comment no. 27 and the revised disclosure. We continue to believe that you should expand your disclosure on page 6 to identify the specific relationships or investments and state that you have not executed any sourcing agreements. As a result, we reissue that portion of the comment.
The Company has added the requested disclosure on page 6.
Summary Risk Factors, page 6
8.
We note that you leverage your investments and are not limited in the amount of leverage that you use. Please expand your disclosure on page 7 to quantify your current leverage.
The Company has modified the referenced summary risk factor, at page 7, to quantify its leverage. A conforming change has been made to the risk factor at page 25.
External Manager, page 9
9.
We note your response to comment no. 25 and the revised disclosure. We continue to believe that you should state that Resource Capital Manager has no employees and that neither you nor your manager will have any independent officers, and we reissue that portion of the comment.
The Company has revised the disclosure as requested at pages 9 and 10, and has provided similar disclosure under “Business – The Manager” at page 85.
10.
We note your response to comment no. 26 and the revised disclosure that senior management and other personnel allocate their time between you and Resource America based on the relative amount of assets managed on your behalf and on behalf of Resource America. Please expand your disclosure to clarify what you mean by this statement and disclose the amount of time your senior management team and these employees will devote to you.
The Company has revised the disclosure as requested at page 10.
Securities and Exchange Commission
October 14, 2005
Page 6 of 16
11.
We note your statement that Ischus has “one CDO with $400 million in assets on a cost basis and $321 million of assets that have been accumulated on our behalf for Ischus CDO II” and your statement that Apidos has over “$189 million in par value of syndicated bank loans, $155 million of which have been accumulated on our behalf for Apidos CDO I.” Please expand your disclosure in the summary and the Business section to briefly describe your interests in each CDO and clarify what you mean by assets that have been “accumulated on our behalf.”
After June 30, 2005, the Company closed the two CDOs, Ischus CDO II and Apidos CDO I, for which assets had been accumulating in warehouse lines. The Company has updated its disclosure in the summary at page 10 concerning Ischus and Apidos accordingly. The Company has also added a description of its interests in the CDOs. Conforming changes have been made in “Business” at page 86.
12.
We note that 5% of Resource Real Estate’s assets are managed on your behalf. Please expand your disclosure in the summary and the Business section to briefly describe these assets and your investment in Resource Real Estate.
The assets previously referred to are solely assets owned by the Company that are managed for the Company by Resource Real Estate pursuant to the management agreement. The Company does not have an investment in Resource Real Estate itself.
Conflicts of Interest in our Relationship with the Manager and Resource America, page 10
13.
We note your disclosure in the third ballet point that the management agreement does not prohibit your investment in investments in which the Manager has an interest and that you anticipate that you will invest in equity portions of CDO’s structured for you by the Manager. Please revise to disclose that you have already invested in two CDO’s structured by your Manager, that you have invested in real estate or real estate loans originated or financed, as the case may be, by your Manager, and that you will purchase equipment leases originated by, and to be managed by, your Manager.
Securities and Exchange Commission
October 14, 2005
Page 7 of 16
The Company has revised the third bullet point in the summary at page 11 and in “Management” at page 110 to provide the requested disclosure about the two CDOs and about future investments in real estate loans and equipment leases originated and managed by the Manager and Resource America. The Company has not invested in any real estate loans structured by the Manager; all real estate loans in the Company’s portfolio have been acquired from third party originators found by the Manager. Accordingly, no reference has been made to any current portfolio loans originated by the Manager.
Our Financing Strategy, page 12
14.
We note your response to comment no. 29 and the revised disclosure including the table on page 5. Please expand your disclosure on page 12