Chastain Capital Reports Third Quarter Results
ATLANTA--(BUSINESS WIRE)--Oct. 30, 1998--Chastain Capital
Corporation (Nasdaq/NM:CHAS), today reported results for the third
quarter ended September 30, 1998, its second quarter of operations.
The Company recorded a loss in funds from operations for the
third quarter of $38,147,000, or $4.46 per share, and a net loss of
$38,169,000, or $4.46 per share. These losses included non-cash
charges of $24,049,000 resulting from marking its investment portfolio
to market, $15,729,000 related to interest rate hedges and a one-time
charge of $500,000 for a forfeited deposit on an acquisition that was
cancelled due to the Company's liquidity position. The Company
recorded a loss in funds from operations for the period April 23, 1998
(the Company's inception) to September 30, 1998 of $37,203,000, or
$4.26 per share, and a net loss of $38,066,000, or $4.36 per share.
These losses included the mark-to-market and interest rate hedge
charges, the forfeited deposit and a non-recurring, non-cash charge of
$878,000 relating to stock options granted at the initial public
offering. Excluding the charges, the Company would have recorded funds
from operations of $2,131,000, or $0.25 per share, in the third
quarter and $3,075,000, or $0.35 per share, for the period April 23,
1998 to September 30, 1998.
In a previous announcement, the Company declared a cash dividend
of $0.32 per share for the third quarter ending September 30, 1998.
The dividend was paid on October 15, 1998 to shareholders of record as
of September 30, 1998.
Chastain Capital disclosed on October 23, 1998 that due to a
tightening of credit markets and the resulting widening of spreads,
the Company's portfolio had incurred estimated losses of $32 million,
of which $24 million has been recognized in the September 30, 1998
financial statements. The remaining $8 million loss will be recognized
in the fourth quarter. The Company also noted that the Board of
Directors had decided to discontinue new investment activity and
concluded that Chastain Capital needed to be restructured. Due to the
Board's decision and the volatile interest rate environment, the
Company terminated its interest rate hedges, resulting in a loss of
$13.5 million in the fourth quarter of 1998. A loss of $15.7 million
was recognized in the September 30, 1998 financial statements, thus a
$2.3 million gain will be recognized in the fourth quarter due to
movements in Treasury rates between September 30, 1998 and the date
the hedges were terminated.
Chastain Capital also previously disclosed that due to the
unrealized losses incurred from marking its portfolio to market and
the loss it will incur on the sale of its interest rate hedges, the
Company was in default of the tangible net worth covenants in its
credit facilities. The Company has received a temporary waiver on the
defaults and is negotiating with its lenders as well as other sources
of capital to provide the Company sufficient liquidity to fund its
obligations, including its whole loan commitments.
During the third quarter, the Company closed on investments
totaling $85 million, bringing the total amount of investments
purchased or originated since the IPO to $188 million. The investments
made during the quarter include $29 million in commercial
mortgage-backed securities (CMBS), $22 million in mezzanine loans, $30
million in mortgage loans originated and $4 million in direct real
estate investments. |
