CRIIMI MAE INVESTS IN MORTGAGE SECURITIES; Interest Rates Reach Pay-Off Level For 39 Percent of REIT's Interest Rate Caps.

ROCKVILLE, Md.--(BUSINESS WIRE)--Dec. 13, 1994--(NYSE:CMM)-- CRIIMI MAE Inc. Chairman William B. Dockser said the company yesterday acquired its second round of investments in high-yielding subordinated mortgage securities backed by pools of uninsured multifamily and commercial mortgages. CRIIMI MAE, which is the largest REIT specializing in multifamily mortgage investments, yesterday purchased three classes of securities backed by two different mortgage portfolios for a combined purchase price of approximately $26.5 million. All of the securities are rated "BB" or "B".

"These mortgage investments are well known to CRIIMI MAE and its adviser," said Mr. Dockser. He explained that the underlying mortgages are part of the $600 million mortgage portfolio which is currently being serviced by CRICO Mortgage Company, an affiliate of CRIIMI MAE's adviser.

"Our familiarity with the history of the loans, their solid track record, and the current return on the securities all make these attractive investments for CRIIMI MAE."

Contribution to 1995 Earnings

Mr. Dockser said these investments are projected to contribute approximately five cents per share to 1995's tax basis income, based on current interest rates and other factors. He added that the income from these investments should offset some of the reduction in earnings from rising short-term interest rates.

During late October, CRIIMI MAE estimated that 1995's dividend would range from 97 cents to $1.04 per share, if short term interest rates and other factors remained constant. Since then, three-month LIBOR -- the interest rate index which determines the interest cost of most of CRIIMI MAE's borrowings -- has increased 75 basis points, rising from approximately 5.6 percent to approximately 6.4 percent. Mr. Dockser explained that this rise in three-month LIBOR will likely reduce 1995's dividend further, though three factors could partially offset the decline in earnings from rising short term interest rates: CRIIMI MAE's interest rate caps, the returns generated by CRIIMI MAE's investments in subordinated debt securities, and the possible conversion to a self-administered company which can add revenues from new businesses such as mortgage servicing.

Interest Rate Hedges: Update

Regarding CRIIMI MAE's interest rate hedging agreements, Mr. Dockser said, "We have reached the point where our caps can begin to limit the earnings impact of rising interest rates, which is precisely the intended role of CRIIMI MAE's interest rate hedges. Short term interest rates have climbed to the range where our interest rate caps can begin to pay-off."

- At its December 12th level of 6.375 percent, three-month LIBOR exceeded the cap rate on $235 million, or 39 percent, of CRIIMI MAE's interest rate caps.

- If three-month LIBOR increases further and exceeds 6.5 percent, three-month LIBOR would exceed the cap rate on a total of $475 million, or 79 percent, of CRIIMI MAE's total caps.

Under CRIIMI MAE's hedging agreements, financial institutions are obligated to pay CRIIMI MAE the amount by which LIBOR, as of specific reset dates, exceeds CRIIMI MAE's interest rate caps. These reset dates are staggered throughout each quarter. While some of CRIIMI MAE's hedges are scheduled to reset late in the fourth quarter, the majority of them will next reset during the first quarter of 1995. These payments serve to partially offset increases in interest expense on CRIIMI MAE's borrowings.

Investments in Mortgage Securities

Yesterday's investments bring the total amount CRIIMI MAE has invested in subordinated debt securities to approximately $39 million. The company made its first investments in these mortgage securities this past summer and its business plan calls for these investments to make up approximately 10 percent of total assets by the end of 1995. At September 30, 1994, assets totaled approximately $945 million.

Yesterday's new investments in mortgage securities have higher ratings and lower current returns than the securities acquired this past summer.

In the investments purchased yesterday:

- CRIIMI MAE acquired two classes of securities backed by one pool of 53 commercial and multifamily mortgages with a face value of approximately $124 million. The securities have ratings of "BB" and "B" and were purchased for approximately $16.8 million.

- CRIIMI MAE also acquired a "BB" rated class of securities backed by another portfolio of 45 predominantly multifamily mortgages with a face value of approximately $168 million. The purchase price was approximately $9.7 million. This class of securities is backed by the same mortgage portfolio in which CRIIMI MAE invested this past summer.

In each case, between 70 and 80 percent of the acquisition was financed, and the company projects these investments will yeild a current return net of financing costs of between 16 and 23 percent. The securities of both underlying pools of mortgages were underwritten and sponsored by affiliates of Citibank, N.A.

CRIIMI MAE Inc. is the largest multifamily mortgage REIT, with total consolidated assets at September 30, 1994 of approximately $945 million. CRIIMI MAE's adviser is an affiliate of CRI, Inc., a real estate investment firm based in the Washington, D.C. area.

CONTACT: James T. Pastore

              301/231-0323
              Susan B. Railey
              301/468-3120