CRIIMI MAE Reports First Quarter Results
ROCKVILLE, Md., May 22 /PRNewswire/ -- CRIIMI MAE Inc. (NYSE: CMM), the
commercial mortgage company that filed a voluntary petition to reorganize
under Chapter 11 of the U.S. Bankruptcy Code on October 5, 1998, today
reported results for the quarter ended March 31, 2000.
CRIIMI MAE reported first quarter 2000 net income available to common
shareholders under generally accepted accounting principles (GAAP) of
approximately $4.0 million, or $0.07 per basic share and $0.06 per diluted
share, compared to approximately $13.4 million, or $0.25 per basic share and
$0.23 per diluted share, for the same period in 1999.
GAAP results for the quarter ended March 31, 2000 included the recognition
of a $3.4 million impairment loss on a portion of the Company's portfolio of
commercial mortgage-backed securities ("CMBS") that it intends to sell as
contemplated by the Company's reorganization plan (the "CMBS Sale Portfolio").
Impairment of $157 million on the CMBS Sale Portfolio was also recognized (as
to each CMBS, representing the difference between the cost and fair value) as
a charge to the income statement in the fourth quarter of 1999. The
additional $3.4 million impairment loss recognized in the first quarter of
2000 reflects further declines in the value of certain assets in the CMBS Sale
Portfolio.
GAAP results for the first quarter of 2000 also included an approximate
$1.4 million realized loss resulting from the sale of a portion of the CMBS
Sale Portfolio.
First quarter 2000 net income reflects a decrease in unrealized gain on
warehouse obligation from $3.9 million in the first quarter of 1999 to no
gains in the first quarter of 2000. There were no gains in the first quarter
of 2000 principally because all of the commercial loans originated under one
of the warehouse obligation facilities had been sold during 1999.
The table, which follows, identifies other items that contributed to the
changes in GAAP earnings during the first quarter of 2000.
Consistent with the Company's plan of reorganization, on March 15, 2000,
CRIIMI MAE elected for tax purposes to be classified as a trader in securities
effective January 1, 2000. Such trading activity is, or is expected to be, in
certain types of mortgage-backed securities, including subordinated CMBS (the
"Trading Assets"). As a trader in securities, the Company will mark-to-market
its Trading Assets for the 2000 tax year and expects to do so for future
years.
The Company initially marked-to-market its Trading Assets on January 1,
2000 and, as a result, recognized losses on those Trading Assets of
approximately $478 million (the "January 2000 Loss"). The January 2000 Loss is
expected to be recognized evenly over four years for tax purposes (i.e.,
approximately $120 million per year) beginning with the Year 2000. For the
quarter ended March 31, 2000, the estimated net operating loss for tax
purposes was approximately $14 million, or a loss of $0.22 per weighted
average share. This net operating loss includes one-fourth (i.e.,
approximately $30 million) of this year's portion of the January 2000 Loss.
The tax basis net operating loss in the first quarter of 2000 compares to tax
basis income of approximately $19.6 million, or $0.37 per weighted average
share for the first quarter of 1999.
Additionally, as a result of its trader election, the Company will be
required to mark-to-market its Trading Assets at the end of each tax year and
reflect those year-end adjustments as unrealized ordinary gains and losses.
In addition, CRIIMI MAE expects to realize ordinary gains and losses during
the year on dispositions of its Trading Assets. So long as available, net
operating losses, including the allocable portion of the January 2000 Loss,
are expected to offset taxable income on an annual basis. Readers should
refer to the Company's Current Report on Form 10-Q for the quarter ended March
31, 2000 for a more complete discussion of the Company's trader election,
including related risks and the effect on taxable income (loss), REIT
distribution requirements and cash flows.
CRIIMI MAE's shareholders' equity increased to approximately $247 million
($2.92 per diluted share) at March 31, 2000, from approximately $219 million
($2.75 per diluted share) at December 31, 1999. The increase in shareholders'
equity during this period primarily resulted from a net overall increase in
the fair market value of the Company's portfolio of CMBS and insured mortgage
securities, and net income under GAAP. |
