Printer Friendly

ASSET INVESTORS REPORTS THIRD QUARTER RESULTS

 DENVER, Nov. 15 /PRNewswire/ -- Asset Investors Corp. (NYSE: AIC) today announced that for the three months ended Sept. 30, 1993, the company had an estimated loss of $10,000,000 or 71 cents per share for REIT purposes as compared to REIT income of $4,200,000 or 30 cents per share for the comparable period in 1992. During the first nine months of 1993, the company had an estimated REIT loss of $3,000,000 or 21 cents per share as compared to REIT income of $12,900,000 or 92 cents per share in the first nine months of 1992.
 For the three months ended Sept. 30, 1993, the company's Excess Inclusion income is estimated to be $1,700,000 or 12 cents per share as compared to Excess Inclusion income of $8,400,000 or 60 cents per share for the comparable period of 1992. For the nine months ended September 30, 1993, Excess Inclusion income is estimated to be $28,800,000 or $2.06 per share as compared to Excess Inclusion income of $25,100,000 or $1.79 per share for the first nine months of 1992.
 The company's results for the third quarter reflect a continued drop in mortgage interest rates. Spencer I. Browne, president and chief executive officer of Asset Investors, stated, "With mortgage rates at 25-year record lows, a substantial portion of the company's portfolio assets generated low returns and, in many cases, losses in the third quarter. This was particularly true with respect to those assets acquired prior to 1991 which were anticipated to generate losses toward the end of their economic lives."
 The company anticipated a drop in earnings for the third quarter due to, among other factors, the sale of 21 REMIC portfolio assets in June 1993. Mr. Browne noted, "The sale of these assets achieved one of the company's goals which was substantially to reduce the effects of Excess Inclusion income on the company's portfolio."
 The company was pleased to announce in mid-October the completion of its long-awaited spin-off distribution of Commercial Assets, Inc. Commercial Assets is a newly-formed REIT organized by Asset Investors to take advantage of the emerging capital market in commercial real estate securitizations.
 The distribution to the stockholders of Asset Investors of approximately 70 percent of the common stock of Commercial Assets is intended to satisfy substantially all of Asset Investors' distribution requirement with respect to Excess Inclusion income for 1992 and the first nine months of 1993. Asset Investors retained approximately 30 percent of Commercial Assets.
 In October 1993, Commercial Assets committed approximately $10,000,000 toward its portfolio acquisition strategy and expects to have profitable operations and to generate dividend distributions in the near future. Asset Investors will be entitled to receive its ownership share of both.
 During the past six months, the company used substantially all of its cash flow not required for expenditures or debt service to acquire cash equivalents pending the capitalization of Commercial Assets. Mr. Browne noted that, "The effect of reinvesting cash flow in low-yielding assets rather than in higher-yielding CMO assets also had a substantial adverse effect on the company's earnings in the third quarter."
 The dividend of shares of Commercial Assets to the company's stockholders and sale of portfolio assets in June 1993 substantially reduced the size of the company which, along with the unprecedented high levels of mortgage loan prepayments resulting from the lowest mortgage interest rates in 25 years, will, in the future, continue to affect adversely the company's results.
 The company incurred a book loss computed in accordance with generally accepted accounting principles (GAAP) of $8,314,000 or 59 cents per share, and $21,249,000 or $1.51 per share, respectively, for the three and nine months ended September 30, 1993, as compared to a book loss of $31,400,000 or $2.24 per share, and $31,634,000 or $2.26 per share, respectively, for the same periods of 1992.
 The company's GAAP results include a provision for reserves and write-downs, net of minority interest, of $2,949,000 and $13,727,000 with respect to the company's CMO residuals and CMO subsidiaries for the three and nine months ended Sept. 30, 1993, respectively. Mr. Browne noted, "These charges reflect the continued decline in mortgage rates creating a wave of mortgage refinancings which has lasted for two years." The provision for reserves and write-downs have no effect on the determination of REIT income, Excess Inclusion income or the company's dividend distribution requirements. If prepayments continue to increase, additional reserves and write-downs may be required.
 Asset Investors Corp. is a real estate investment trust which generates income from a portfolio of ownership interests in the issuances of collateralized mortgage obligations (CMOs) and other mortgage-related assets.
 ASSET INVESTORS CORP. AND SUBSIDIARIES
 Summary Of Financial Results
 (In thousands, except per share data)
 Three Months Ended Nine Months Ended
 Sept. 30, Sept. 30,
 1993 1992 1993 1992
 Estimated REIT Income (1)
 REIT (loss) income $(10,000) $ 4,200 $ (3,000) $ 12,900
 REIT (loss) income per share (.71) .30 (.21) .92
 Estimated Excess Inclusion Income
 Excess Inclusion income $ 1,700 $ 8,400 $28,800 $25,100
 Excess Inclusion income per share .12 .60 2.06 1.79
 GAAP Income
 Revenues (2) $ 52,133 $ 88,807 $186,069 $310,778
 Net loss (8,314) (31,400) (21,249) (31,634)
 Net loss per share (.59) (2.24) (1.51) (2.26)
 Provision for reserves and
 write-downs, net of minority
 interest (included in net loss
 above) (2,949) (30,534) (13,727) (34,551)
 Gain (loss) on sale of assets
 (included in net loss above) 91 298 (6,134) 1,733
 Dividends (3)
 Cash dividends paid per share $.10 $.18 $.20 $1.08
 Stock dividends declared
 per share 3.73 -- 3.73 --
 Shares Outstanding
 Weighted-average shares
 outstanding 14,045 13,986 14,006 13,986
 (1) Estimated REIT income for the nine months ended Sept. 30, 1993, is net of $3,918,000 of capital losses which were used to offset capital gains of the same amount. An additional $19,052,000 of capital losses were generated in the second quarter of 1993 which will be available to offset future capital gains through 1998.
 (2) CMO subsidiaries are accounted for under the Consolidation Method (which records the gross amount of the mortgage collateral, CMO bonds, interest income and interest expense in the Condensed Consolidated Financial Statements). Conversely, CMO residuals and CMO classes are accounted for under a method which, unlike the Consolidation Method, requires carrying amount of, and the earnings and cash flows from, such portfolio assets to be recorded as a single-line item on each of the respective Condensed Consolidation Financial Statements. Based on the criteria established under GAAP, all portfolio assets acquired by the company during the past four years were classified, for accounting purposes, as CMO residuals or CMO classes. Because the company has not acquired any CMO subsidiaries since July 1988, revenues and expenses from CMO subsidiaries have declined during each subsequent period. The decline results from mortgage loan repayments during these periods which decreased the principal balance of the related mortgage collateral and CMO bonds and, as a result, reduced interest income and interest expense. Unless the company acquires additional CMO subsidiaries, revenues and expenses from CMO subsidiaries are expected to continue to decline.
 (3) The second quarter 1993 dividend was paid on Sept. 7, 1993 to stockholders of record on Aug. 31, 1993. On Sept. 15, 1993, the company's Board of Directors declared a dividend of approximately 70 percent of the common stock of Commercial Assets, Inc. to stockholders of Asset Investors of record on Oct. 1, 1993 which was distributed on Oct. 12, 1993.
 For Additional Information on Asset Investors Corp. by FAX at No Cost, Dial 1-800-PRO-INFO, Code No. 016.
 Asset Investors Corp.
 3600 South Yosemite Ste. 900
 Denver, Colorado 80237
 -0- 11/15/93
 /CONTACT: Spencer I. Browne, president & CEO of Asset Investors Corp., 303-793-2703; or Regina Ryan of FRB, in New York, 212-661-8030 or Gary Strong, in Chicago, 312-266-7800/
 (AIC)


CO: Asset Investors Corp. ST: Colorado IN: FIN SU: ERN

WB -- NY090 -- 4527 11/15/93 14:22 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Nov 15, 1993
Words:1366
Previous Article:COMSTOCK RESOURCES, INC. ANNOUNCES 1993 THIRD QUARTER FINANCIAL RESULTS
Next Article:UPS UNVEILS NEW CODING TECHNOLOGY, HAND-HELD COMPUTER FOR DRIVERS
Topics:

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters