Chastain Capital Increases Dividend; Authorizes Additional Stock Repurchase; Completes First International Investment
ATLANTA--(BUSINESS WIRE)--Sept. 9, 1998--Chastain Capital Corporation (Nasdaq/NM:CHAS), a hybrid commercial real estate investment trust managed by Lend Lease Real Estate Investments, Inc., today announced that its Board of Directors has declared a cash dividend of $0.32 per share for the third quarter ending Sept. 30, 1998. The dividend, Chastain Capital's second since its initial public offering on April 23, 1998, is payable on Oct. 15, 1998, to shareholders of record as of Sept. 30, 1998.
Chastain Capital also announced that it has repurchased all of the 898,000 shares authorized by the Board of Directors on Aug. 3, 1998, at an average price of $10.83 per share and estimates that as of Aug. 31, 1998, its book value per share is approximately $14.09.
The Board has authorized the repurchase of up to an additional 900,000 shares, which represent 11% of its common stock outstanding. Purchases in the stock repurchase program will be made from time to time in the open market or in privately negotiated transactions at Chastain Capital's discretion. No minimum number or value of shares to be purchased has been set and no there is no expiration date for the program.
The Company purchased $19.6 million of a $165 million mezzanine loan to Blackstone Hotel Acquisition Company to acquire five luxury hotels in London with a total of 716 rooms for $912 million. Including the first mortgage loan of $451 million, the investment has a conservative 67.5% loan to value ratio. The five hotels are The Savoy, Claridge's, The Berkeley, The Connaught and The Lygon Arms. With the addition of the Company's first international investment, Chastain Capital has now completed investments totaling $176.6 million.
Kurt Wright, Chastain Capital's chief executive officer, stated, "We have been very opportunistic in repurchasing our stock and believe these actions have created significant shareholder value. With this new authorization, we will continue our efforts to invest accretively for our shareholders. Chastain has completed $176.6 million in investments to date, and our first two dividends reflect this ability to deliver on our business plan and investment strategy. We remain committed to this plan and believe there are many other opportunities in the commercial real estate debt and equity markets such as the London investment that we can exploit. One of the strengths of our organization has always been the global reach of Lend Lease and the pipeline of both domestic and international investments that this global presence provides. We are pleased to make our first international investment with a loan secured by first quality assets at such a low loan to value."
The Company also disclosed that due to the recent widening of commercial mortgage-backed securities (CMBS) spreads, as of Aug. 31, 1998 its CMBS portfolio had a cost basis of $102.8 million and an unrealized loss of $1.2 million. In accordance with generally accepted accounting principles (GAAP), this unrealized loss will not effect cash flow from operations or GAAP net income. With regards to Chastain's interest rate risk management program, due to the decline in Treasury rates as of Aug. 31, 1998 its negative marked-to-market on its portfolio of forward Treasury locks is $6.9 million. This amount will be reflected only in the supplemental footnotes to the Company's financial statements and is expected to be offset by lower borrowing costs as a result of recent price movements in the bond markets.
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