Realty Finance Corporation Responds to Beck Street Press Release

Oct 20, 2010, 18:06 ET from Realty Finance Corporation

ROCKY HILL, Conn., Oct. 20 /PRNewswire/ -- Realty Finance Corporation (Pink Sheets: RTYFZ) (the "Company"), today is providing investors with information omitted by Beck Street Capital ("Beck Street") from its press release issued yesterday.  The supplemental information furnished by the Company is set out below.

In January of this year, Beck Street provided the Company with a preliminary indication of interest in a transaction in which Beck Street would assume control of the Company without any payment to the Company's stockholders.  The preliminary indication of interest

  • did not provide for any infusion of capital into the Company;
  • provided for a temporary deferral of newly proposed external management fees that Beck Street  proposed would be payable by the Company to Beck Street  (and did not provide, as yesterday's press release suggested, that Beck Street would manage the Company for an interim  period for free);
  • lacked a specific business plan; and
  • provided that the Company would issue warrants entitling Beck Street  to acquire an unspecified number of shares of the Company's common stock for an unspecified price.

Beck Street's indication of interest was preliminary and conditional insofar as

  • it was expressly conditioned on Beck Street  performing due diligence, and
  • it gave no specifics as to the warrants.

The Company proceeded to have several conversations regarding such proposal and stated its concern that no capital infusion was contemplated and requested a more specific business plan from Beck Street  on how it would achieve stockholder growth.  As a result of several factors, including but not limited to, the lack of capital commitment which the Board of Directors of the Company thought would be necessary to institute a growth plan and the absence of a specific business plan, the Company chose not to pursue this proposal any further.  However, it indicated it would be willing to reconsider any future proposal that would address the concerns raised by the Board of Directors of the Company.  The Company had additional conversations with Beck Street in May and June of this year which did not result in a revised proposal or additional information and, prior to yesterday's press release, has not engaged in any communication regarding such a proposal since July of this year.

The Company has solicited, evaluated and engaged in discussions with respect to a wide range of strategic alternatives over the past three years. It has investigated each proposal in light of the circumstances surrounding the Company at the time, and will continue to do so in the future in the event the Board receives new or modified proposals. The strategic alternatives that the Board has received and investigated to date have either been determined not to have been viable or lacked sufficient information or credibility to enable the Board to make informed decisions as to the merits of such alternatives or to proceed with such action. Given the Company's current financial position, it is not in the financial position to expend the cash or resources to pursue proposals that are speculative.

The Board continues to explore various strategic options for the Company.  There is no assurance, however,  that any definitive agreement for any such strategy's option will be reached. In addition, the Company has been evaluating a liquidation of the Company, including filing a Chapter 7 bankruptcy, and ultimately may determine to wind down the affairs of its business and distribute remaining cash, if any, to its stockholders due to, among other things, the Company's inability to complete a strategic transaction, the significant reduction in the value of the Company's platform, the Company's inability to execute its business plan, the Company's inability to obtain new capital, the Company's lack of future sources of cash flow, the Company's operating cash shortfalls, the Company's ability to operate as a going concern, the numerous defaulted investments in the Company's portfolio, the significant reduction of Company personnel and the continuing volatility of real estate and real estate credit markets.

The Company continues to focus on controlling operating expenses while effectively managing its investments, including CDO I. Despite the difficult commercial real estate environment and the disappointing financial results, the Company remains committed to maximizing stockholder value.

About Realty Finance Corporation

Realty Finance Corporation is a commercial real estate specialty finance company primarily focused on managing a diversified portfolio of commercial real estate-related loans and securities. For more information on the Company, please visit the Company's website at

The Company's common stock is currently quoted on the Pink OTC Markets, or Pink Sheets. While not a requirement, the Pink Sheets encourages companies having their securities quoted thereon to provide adequate current information in accordance with its disclosure guidelines. The Company will evaluate the need to issue press releases containing information similar to such information disclosed herein. There is no assurance that the Company will provide timely periodic disclosures or at all.

The Company has elected to qualify to be taxed as a real estate investment trust, or REIT, for U. S. federal income tax purposes commencing with the taxable year ended December 31, 2005. As a REIT, the Company generally will not be subject to U. S. federal income tax on that portion of income that is distributed to stockholders if at least 90% of the its REIT taxable income is distributed to its stockholders. The Company conducts its operations so as to not be regulated as an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act. The Company has not had any taxable income in 2008 and 2009 and does not expect to have any taxable income in the future.

Forward-Looking Information

This press release contains forward-looking statements based upon the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company or are within its control. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements. The factors that could cause actual results to vary from the Company's forward-looking statements include: the Company's ability to continue to cover its operating cash shortfall; the risk factors included as part of the Company's Annual Report on Form 10-K for the period December 31, 2008 filed on March 16, 2009; the Company's future operating results; its business operations and prospects; general volatility of the securities market in which the Company invests and the market prices of its common stock; the effect of trading on the Pink Sheets; availability, terms and deployment of short-term and long-term capital; availability of qualified personnel; changes in the industry; interest rates; the debt securities, credit and capital markets, the general economy or the commercial finance and real estate markets specifically; performance and financial condition of borrowers and corporate customers; the status of the appeal of the class action lawsuit; any future litigation that may arise; the ultimate resolution of the Company's numerous defaulted loans; the state of the Company's joint venture investments; the ability to continue as a going concern; availability of liquidity; and other factors, which are beyond the Company's control. The Company undertakes no obligation to publicly update or revise any of the forward-looking statements. For further information, please refer to the Company's previous periodic filings with the Securities and Exchange Commission. However, the Company is no longer a Securities and Exchange Commission reporting company as of March 16, 2009 and therefore, such information is not current and circumstances have changed significantly since the date of such filings.

SOURCE Realty Finance Corporation