Patrick Harden

Resource Capital's Dividend Dilemma

REITs have to pay out 90% of their ordinary taxable income to shareholders in order to retain REIT status. RSO is paying out more to shareholders than necessary (over 100% of taxable income) - thus you are getting a portion of your original investment back as a return of capital. Instead, RSO could buy back its own shares at market prices that are below book value and add shareholder value that way.

Resource Capital's Dividend Dilemma

RSO did execute some debt repurchases at a significant discount during the quarter. I was implying that the Company could increase the debt repurchases even further using the capital retained from a dividend decrease.