þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES    EXCHANGE ACT OF 1934

---

---

---

---

---

---

---

---

---

•	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 100% of the equity of the following VIE:

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

•	RCC Commercial II, Inc. (“Commercial II”) holds bank loan investments.  Commercial II owns 100% and 66.6%, respectively, of the equity of the following VIEs:

▪	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, ABS and corporate bonds.

▪	Whitney CLO I, Ltd. ("Whitney CLO I"), a Cayman Islands limited liability company and TRS. Whitney CLO I is a collateralized loan obligation ("CLO") issuance secured by a portfolio of bank loans and corporate bonds. The Company is the primary beneficiary of Whitney CLO I and therefore consolidates 100% of this VIE in its financial statements.

•	RCC Commercial III, Inc. (“Commercial III”) holds bank loan investments and commercial real estate-related securities.  Commercial III owns 90% of the equity of the following VIE:

▪	Apidos CDO I, Ltd. (“Apidos CDO I”), a Cayman Islands limited liability company and TRS.  Apidos CDO I 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 management rights in bank loan CLOs 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 four CLO 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 ("CVC Credit Partners"). Whitney CLO I, one of the RCAM CLOs, is consolidated in the Company's financial statements as a result of a purchase of its preferred equity which gave the Company a controlling interest.

---

▪	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 and corporate bonds. The Company is the primary beneficiary of Apidos CLO VIII and therefore consolidates 100% of this VIE in its financial statements.

•	Resource TRS IV, Inc. (“Resource TRS IV”), a TRS directly owned by the Company, holds the Company's equity investment in hotel condominium units acquired in conjunction with a loan foreclosure.

•	Resource TRS V, Inc. (“Resource TRS V”), a TRS directly owned by the Company, holds the Company's equity investment in a held for sale condominium complex.

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

---

---

---

---

---

---

---

(1)	The Company's maximum exposure to loss at March 31, 2013 does not exceed the carrying amount of its investment, subject to the LEAF Receivables Funding 3's contingent obligation as described above.

---

(1)	As of March 31, 2013 and December 31, 2012, $192.7 million and $195.2 million, respectively, of securities were pledged as collateral security under related financings.

---

---

•	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.

---

---

(1)

Amounts include deferred amendment fees of $375,000 and $450,000 and deferred upfront fees of $310,000 and $334,000 being amortized over the life of the bank loans as of March 31, 2013 and December 31, 2012, respectively.  Amounts include loan origination fees of $2.0 million and $1.9 million and loan extension fees of $194,000 and $214,000 being amortized over the life of the commercial real estate loans as of March 31, 2013 and December 31, 2012, respectively.

(2)	Substantially all loans are pledged as collateral under various borrowings at March 31, 2013 and December 31, 2012, respectively.

(3)	Amounts include $18.2 million and $14.9 million of bank loans held for sale at March 31, 2013 and December 31, 2012, respectively.

(4)	Amount includes $34.0 million from two whole loans which are classified as loans held for sale at December 31, 2012.

---

(1)	Whole loans had $9.5 million and $8.9 million in unfunded loan commitments as of March 31, 2013 and December 31, 2012, 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 $9.2 million and $8.0 million as of March 31, 2013 and December 31, 2012, 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 December 31, 2012.

(5)	Floating rate whole loans include a $1.0 million preferred equity tranche of a whole loan that has a fixed rate of 10.0% as of March 31, 2013 and December 31, 2012, respectively.

(6)	Amount includes $34.0 million from two whole loans that are classified as loans held for sale at December 31, 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)	Weighted average life of commercial real estate loans assumes full exercise of extension options available to borrowers.

---

---

---

---

---

---

(1)	Loans receivable - related party has received paydowns for the three months ended March 31, 2013 and currently has an outstanding balance of $6.3 million as of March 31, 2013.

---

---

(1)	Amount represents principal outstanding of $116.7 million and $146.4 million less unamortized issuance costs of $499,000 and $728,000 as of March 31, 2013 and December 31, 2012, respectively.  This CDO transaction closed in August 2006.

(2)	Amount represents principal outstanding of $200.4 million and $227.4 million less unamortized issuance costs of $1.1 million and $1.4 million as of March 31, 2013 and December 31, 2012, respectively.  This CDO transaction closed in June 2007.

(3)	Amount represents principal outstanding of $174.6 million and $203.2 million less unamortized issuance costs of $148,000 and $274,000 as of March 31, 2013 and December 31, 2012, respectively.  This CDO transaction closed in August 2005.

(4)	Amount represents principal outstanding of $193.7 million and $222.0 million less unamortized issuance costs of $474,000 and $659,000 as of March 31, 2013 and December 31, 2012, 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 $1.3 million and $1.5 million as of March 31, 2013 and December 31, 2012, respectively.  This CDO transaction closed in May 2007.

---

(6)	Amount represents principal outstanding of $317.6 million and $317.6 million, less unamortized issuance costs of $4.5 million and $4.7 million, and less unamortized discounts of $11.5 million and $11.9 million as of March 31, 2013 and December 31, 2012, 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 $44.1 million and $47.5 million less unamortized deferred debt costs of $117,000 and $23,000 and accrued interest costs of $24,000 and $37,000 related to CMBS repurchase facilities as of March, 2013 and December 31, 2012, respectively, and principal outstanding of $64.4 million and $59.1 million less unamortized deferred debt costs of $219,000 and $348,000 and accrued interest costs of $87,000 and $79,000 related to CRE repurchase facilities as of March, 2013 and December 31, 2012. Amount does not reflect CMBS repurchase agreement borrowings that are components of Linked Transactions. At March, 2013 and December 31, 2012, the Company had repurchase agreements of $53.6 million and $20.4 million, respectively, that were linked to CMBS purchases and accounted for as Linked Transactions, and as such, the linked repurchase agreements are not included in the above table. (See Note 20).

(9)	Amount represents principal outstanding of $13.6 million as of March 31, 2013 and December 31, 2012, respectively.  This real estate transaction closed in August 2011.

(10)	Amount represents principal outstanding of $146.3 million less unamortized discounts of $2.1 million as of December 31, 2012 . In October 2012 the Company purchased a $20.9 million equity interest in Whitney CLO I which represents 66.6% of the outstanding preference shares. The transaction gave the Company a controlling interest in the CLO.

(11)	The securitized borrowings are collateralized by the same assets as the Apidos CLO VIII Senior Notes and the Whitney CLO I Senior Notes, respectively.

---

---

---

---

---

(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.

(2)	$13.3 million and $12.2 million of linked repurchase agreement borrowings are being included as derivative instruments as of March 31, 2013 and December 31, 2012, respectively, (see Note 20).

---

(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.

---

(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.

(2)	$16.8 million and $3.5 million of linked repurchase agreement borrowings are being included as derivative instruments as of March 31, 2013 and December 31, 2012. (See Note 20).

(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.

(2)	$13.5 million and $4.7 million of linked repurchase agreement borrowings are being included as derivative instruments as of March 31, 2013 and December 31, 2012. (See Note 20).

---

---

---

---

---

---

---

---

---

---

---

•

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 FASB 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 FASB ASC 815 to be measured at fair value in the statement of financial position each reporting period.

---

---

---

---

(1)	Amounts disclosed in the Financial Instruments column of the table above represents collateral pledged that is available to be offset against liability balances associated with repurchase agreement and derivative transactions. Amounts disclosed in the Cash Collateral Pledged column of the table above represents amounts pledged as collateral against derivative transactions.

(2)	The fair value of securities pledged against the Company's swaps was $12.7 million and $13.1 million at March 31, 2013 and December 31, 2012, respectively.

(3)	The fair value of securities pledged against the Company's repurchase agreements was $148.5 million and $145.2 million at March 31, 2013 and December 31, 2012, respectively.

---

---

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

---

---

---

---

•	an increase in the weighted average yield to 5.68% during the three months ended March 31, 2013 from 4.82% during the three months ended March 31, 2012 as a result of newly originated real estate loans with higher stated interest rates than our legacy portfolio and as a result of exit fees from three loans that paid off during the three months ended March 31, 2013; and

•

an increase of $18.7 million in the weighted average loan balance to $703.8 million for the three months ended March 31, 2013 from $685.2 million for the three months ended March 31, 2012 as we reinvested proceeds from payoffs and paydowns, classified as restricted CDO cash on our balance sheet, beginning in the fourth quarter of 2011, with the majority of these proceeds being reinvested during the second and third quarters of 2012.  In addition, we began to originate new loans financed by our Wells Fargo CRE credit facility coupled with new equity raised in 2012 and 2013.

---

---

---

•

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 $659,000 for the three months ended March 31, 2012. There was no fee during the three months ended March 31, 2013 as a result of the charge-off of assets in our CRE and Apidos portfolios. 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 $648,000 (35%) to $2.5 million for the three months ended March 31, 2013 as compared to $1.9 million for the three months ended March 31, 2012. This increase was 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 $91.1 million of proceeds from the sales of common stock through our Dividend Reinvestment and Stock Purchase Plan or DRIP, from January 1, 2012 through March 31, 2013 as well as the receipt of $55.6 million from the proceeds of our September 2012 secondary common stock offerings. In addition, we had two issuances of preferred stock. First, in June 2012 we sold $6.0 million 8.5% Series A cumulative preferred shares, or Series A.  We also entered into an at-the-market sales agreement and sold $9.8 million of Series A through March 31, 2013.  In October 2012, we issued $24.2 million of 8.25% Series B preferred shares, or Series B.  We also entered into an at-the-market sales agreement and sold $30.4 million of Series B through March 31, 2013.

•	Incentive management fees related to our structured finance manager decreased by $605,000 (67%) to $301,000 for the three months ended March 31, 2013 as compared to $906,000 for the three months ended March 31, 2012. The decrease in fees is primarily related to the sale of 12 securities in September 2012, resulting in fewer assets earning payments.

---

•	an increase of $466,000 in payroll expense related to additional accounting and administrative professionals.

•	an increase of $80,000 primarily related to the payment of fees to the investment committee of our board of directors for their services. We resumed paying these fees in April 2012.

---

---

(1)	Net carrying amount includes an allowance for loan losses of $9.2 million at March 31, 2013, allocated as follows:  B notes $219,000, mezzanine loans $914,000 and whole loans $8.0 million. Net carrying amount includes an allowance for loan losses of $8.0 million at December 31, 2012, allocated as follows:  B notes $206,000, mezzanine loans $860,000 and whole loans $6.9 million.

(2)	Net carrying amount includes allowance for loan losses of $7.8 million and $9.7 million as of March 31, 2013 and December 31, 2012, respectively.

(3)	Loans held for sale are carried at the lower of cost or market. Amortized cost is equal to fair value.

---

---

(1)	Whole loans had $9.5 million and $8.9 million in unfunded loan commitments as of March 31, 2013 and December 31, 2012, 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 losses of $9.2 million and $8.0 million recorded as of March 31, 2013 and December 31, 2012, respectively.

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

(4)	Floating rate whole loans includes a $2.0 million portion of a whole loan that has a fixed rate of 15.0% as of December 31, 2012.

(5)	Floating rate whole loans includes a $1.0 million preferred equity tranche of a whole loan that has a fixed rate of 10.0% as of March 31, 2013 and December 31, 2012.

(6)	Amount includes $34.0 million of two whole loans that are classified as a loan held for sale at December 31, 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)	Loans receivable - related party has received paydowns for the three months ended March 31, 2013 and currently has an outstanding balance of $6.3 million as of March 31, 2013.

---

---

---

•

In February 2011, we acquired the rights to manage the assets held by Whitney CLO I. In October 2012, we purchased 66.6% of the oustanding preferred equity. Based upon that purchase, we determined that we had a controlling interest and consolidated Whitney CLO I. The balance of senior notes outstanding as of October 2012, the date of acquisition, was $209.5 million at a discount of 1.47% . All of the notes issued mature on March 1, 2017. We have the right to call the notes anytime after March 1, 2009 until maturity in March 2017. The weighted average interest rate on all

---

•

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 March 31, 2013, the notes issued to outside investors had a weighted average borrowing rate of 2.13%.

•

In June 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, $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 March 31, 2013, the notes issued to outside investors 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 March 31, 2013, $41.6 million of Class A-1 notes had been paid down and $50.0 million of the Class A-1R senior notes had been redeemed.

•

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 March 31, 2013, the notes issued to outside investors had a weighted average borrowing rate of 0.80%.

•

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 March 31, 2013, the notes issued to outside investors had a weighted average borrowing rate of 1.64%.  The reinvestment period expired in September 2011 and the CDO has begun paying down the senior notes as principal is collected.  Through March 31, 2013, $75.4 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 March 31, 2013, the notes issued to outside investors had a weighted average borrowing rate of 0.80%.  The reinvestment period expired in June 2012 and the CDO has begun paying down the senior notes as principal is collected. Through March 31, 2013, $68.8 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 Apidos Capital Management by the Manager.  Our subsidiary, RCC Commercial II, repurchased $2.0 million of the Class B notes in May 2012.  At March 31, 2013, 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 March 31, 2013, $144.9 million of the Class A-1 senior notes had been paid down.

---

•

On June 21, 2011, we surrendered to the respective trustees, for cancellation without consideration, certain notes issued by RREF CDO 2007-1 and RREF CDO 2006-1.  In RREF CDO 2007-1, we surrendered $7.5 million of the Class B notes, $6.5 million of the Class F notes, $6.25 million of the Class G notes and $10.6 million of the Class H notes.  In RREF CDO 2006-1, we surrendered $6.9 million of the Class B notes, $7.7 million of the Class C notes, $5.52 million of the Class D notes, $7.0 million of the Class E notes and $5.25 million of the Class F notes.  The surrendered notes were canceled by the trustee under the applicable indentures, and the obligations due under those notes were deemed extinguished.  The effect of these cancellations improves each CDO’s performance with respect to its over-collateralization and interest coverage tests, with which each CDO had complied before cancellation, and secures our long term interest in these structured vehicles.

---

---

(1)	Distributions on retained equity interests in CDOs (comprised of note investments and preference share ownership) and principal paydowns on notes owned, RREF CDO 2006-1 includes $16.0 million and $2.3 million of paydowns as of March 31, 2013 and December 31, 2012, respectively.

(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)	Distributions from Apidos CLO VIII, which closed in October 2011, includes $190,000 and $752,000 in base and subordinated management fees for the three months ended March 31, 2013 and year ended December 31, 2012, respectively; RSO's distributions represent 43% of the subordinated debt as a result of our investment of $15.0 million.

(8)	Whitney CLO I was acquired in October 2012, when RSO purchased 66.6% of the outstanding preference shares, includes $203,000 and $236,000 of collateral management fees for the three months ended March 31, 2013 and year ended December 31, 2012, respectively.

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

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

•	unrestricted cash and cash equivalents of $162.8 million, restricted cash of $500,000 in margin call accounts and restricted cash of $4.3 million in the form of real estate escrows, reserves and deposits; and

•	capital available for reinvestment in its three of its CDO entities of $30.6 million, of which $710,000 is designated to finance future funding commitments on CRE loans, loan principal repayments of $74.5 million that will pay down outstanding CLO notes, and $11.4 million in interest collections.

(1)

Contractual commitments do not include $3.1 million, $6.4 million, $3.9 million, $8.1 million, $15.2 million, $11.0 million and $40.0 million of interest expense payable through the stated maturity dates of July 2014, May 2015, May 2015, March 2017, June 2017 and October 2017, respectively, on Apidos CDO I, Apidos Cinco CDO, Apidos CDO III, RREF 2006-1, Whitney CLO I, RREF 2007-1 and Apidos CLO VIII.  The maturity date represents the period under which the CDO assets can be sold, resulting in repayment of the CDO notes.

(2)	Contractual commitments include $115,000 of interest expense payable through the maturity date of April 18, 2013 on our repurchase agreements.

---

(3)	Contractual commitments do not include $46.1 million and $47.0 million of estimated interest expense payable through the maturity dates of June 2036 and October 2036, respectively, on our trust preferred securities.

(4)	The joint venture agreement requires us to contribute 3% to 5% (depending on the terms of the agreement pursuant to which the particular asset is being acquired) of the total funding required for each asset acquisition as needed, up to a specified amount.  We expect that all remaining assets will be sold within two years.

(5)	Unfunded commitments on CRE loans generally fall into two categories: (1) pre-approved capital improvement projects; and (2) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, we would receive additional loan interest income on the advanced amount.

(6)	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.

ITEM 3 .	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

---

---

•	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.”

ITEM 4.	CONTROLS AND PROCEDURES

---

---

(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 April 8, 2013.

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

(22)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on October 1, 2012.

(23)	Filed previously as an exhibit to the Company's Current Report on Form 8-K filed on March 19, 2013.

---