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What: Shares of Resource Capital Corp. (NYSE:RSO) are trading lower by more than 10% today as the company posted weaker than expected total interest income and adjusted funds from operations (AFFO).

So what: The beleaguered Resource Capital Corp. reported AFFO of $0.15 per share, missing expectations by $0.02 per share for the second quarter. The weak quarter came on the back of a GAAP net loss of $0.24 per share due to the impairment of a mezzanine loan made to a luxury hotel in Puerto Rico.

The loan's impact was sizable relative to the company's total balance sheet. It fully reserved against the loan principal for an amount of $38.1 million, and reversed accrued interest of $3 million, for a total impact of $41.1 million, or $0.31 per share.

Book value per common share now stands at $4.56, down from $5.00 last quarter, and $5.07 at the end of 2014.

Now what: In the earnings release, the company also announced a one-for-four reverse split, which take place on August 31. Though a reverse split says nothing about the total valuation of the business -- the result is fewer shares at a proportionately higher price per share -- it may offer an ominous sign about future impairments to the company's loan portfolio.

The company announced that its Board of Directors approved a $50 million plan to repurchase outstanding equity and debt securities. However, given the company's current leverage is in line with its debt-to-equity ratio over the last several quarters, it seems likely that the bulk of its repurchasing firepower, if used, will go to repurchasing debt, not common stock.

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