SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 4, 1997
OCWEN ASSET INVESTMENT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 000-22389 65-0736120
(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
THE FORUM, SUITE 1000
1675 PALM BEACH LAKES BOULEVARD, WEST PALM BEACH, FLORIDA 33401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(561) 681-8000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
PAGE 1 OF 8
EXHIBIT INDEX ON PAGE 4
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ITEM 5. OTHER EVENTS
The news release of Ocwen Asset Investment Corp. dated December 4, 1997,
regarding its November 1997 investments of $35.4 million and $164.9 million in
outstanding commitments, is attached and filed herewith as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following exhibit is filed as part of this report:
(99) News release of Ocwen Asset Investment Corp. dated
December 4, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
OCWEN ASSET INVESTMENT CORP.
(Registrant)
By: /s/ Mark S. Zeidman
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Mark S. Zeidman
Senior Vice President and Chief Financial Officer
Date: December 9, 1997
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INDEX TO EXHIBIT
EXHIBIT NO. DESCRIPTION PAGE
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99 News release of Ocwen Asset Investment Corp. dated 5
December 4, 1997 regarding its November 1997
investments of $35.4 million and $164.9 million in
outstanding commitments.
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Ocwen Asset Investment Corp. Exhibit 99
1675 Palm Beach Lakes Boulevard
West Palm Beach, FL 33401
NASDAQ Symbol: OAIC
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NEWS RELEASE: IMMEDIATE DECEMBER 4, 1997
OCWEN ASSET INVESTMENT CORP. REPORTS NOVEMBER 1997 INVESTMENTS OF $35.4 MILLION
AND $164.9 MILLION IN OUTSTANDING COMMITMENTS
Ocwen Asset Investment Corp., a publicly traded real estate investment trust
(NASDAQ: OAIC), announced today that it has invested $35.4 million during the
month of November 1997 bringing its total invested assets to $181.4 million. Of
the November activity, OAIC invested $19.1 million to purchase a shopping center
in Bradenton, Florida; $3.3 million to purchase two discounted non-performing
loans; $9.5 million in subordinated securities; $274,000 in residential whole
loans; and an initial funding of $3.3 million on a $13.3 million hotel
renovation loan. Christine Reich, President of OAIC stated, "After closing these
transactions, our outstanding commitments stand at $164.9 million represented by
a $14.0 million real estate acquisition under contract and subject to completion
of due diligence, $49.0 million in subordinated investments, $5.0 million in
other mortgage related securities, $3.6 million in residential whole loans and
$93.3 million in mezzanine financing and construction loan commitments which are
subject to various conditions the borrowers must satisfy prior to OAIC closing
the transactions."
ANTICIPATED TRANSACTIONS
OAIC has closed and funded transactions of $11.1 million and $5.6 million in
October 1997, respectively, and $45.4 million and $35.4 million in November
1997, respectively. In December 1997, OAIC anticipates closing $90.6 million of
its existing commitments with fundings of approximately $65 million. At present,
OAIC expects that its remaining outstanding commitments will fund as follows:
January 1998:
o $14.0 million real estate acquisition being purchased out of
bankruptcy the first week in January; and
o $33.6 million in two real estate lending transactions with
initial fundings of approximately $7.0 million.
February 1998:
o $26.7 million in a real estate lending transaction with an
initial funding of approximately $3.0 million.
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Contacts Christine A. Reich (561) 681-8569
William C. Erbey (561) 681-8520
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The outstanding commitments are subject to various conditions including, but not
limited to, completion of satisfactory due diligence and conditions the
borrowers must satisfy prior to OAIC closing the transactions. OAIC is also in
the process of considering other possible investments, certain of which OAIC may
or may not commit to, and that which may or may not close, prior to year-end.
In addition to these investments, OAIC is considering investments in
subordinated or residual interests in residential subprime mortgage loan
securities. Christine Reich stated, "We believe that there may be attractive
opportunities in the subordinated and residual residential subprime mortgage
market that would meet the OAIC risk/reward and asset quality requirements. In
reviewing these opportunities, OAIC will continue to leverage the servicing
experience of Ocwen Financial Corporation (NYSE: OCN) and maintain its
disciplined approach to investing."
As a result of the strengthening U.S. dollar, OAIC has incurred a foreign
currency loss of approximately $465,000 as of December 3, 1997 related to its
ownership of Canadian mortgage loans with unpaid principal balances of $38.2
million Canadian dollars. These loans are secured by the Bayers Road Shopping
Center in Halifax, Nova Scotia, Canada.
REVIEW OF NOVEMBER 1997 TRANSACTIONS
REAL ESTATE ACQUISITIONS
On November, 10, 1997, OAIC purchased Cortez Plaza, a 97% leased 289,686 square
foot shopping center in Bradenton, Florida, a suburb of Tampa Bay. The property
was purchased for $18.4 million. In a separate transaction, the fee simple title
to a large portion of the shopping center that had been subject to a ground
lease was purchased simultaneously for $650,000 resulting in a total investment
of $19.1 million. National and regional tenants including Publix, Walgreens,
PetSmart, Circuit City and Montgomery Ward comprise over 86% of the center. The
shopping center is located on the corner of two major thoroughfares serving
Bradenton and enjoys excellent access and visibility. Jordan C. Paul, Sr. Vice
President of Commercial Real Estate, stated, "We are very pleased with this
acquisition because it combines an outstanding location, strong anchor tenants
and demonstrates OAIC's ability to increase asset values through creative
restructuring and repositioning. In particular, we were able to acquire this
property at an attractive price due in part to the existence of a ground lease
that encumbered a large part of the center's parking lot. By simultaneously
acquiring the fee simple title to the ground leased portion of the center, we
were able to immediately improve the value and marketability of this project. We
foresee additional value creation potential as below market leases mature over
the next three years."
SUBORDINATE INVESTMENTS
On November 24, 1997, OAIC purchased $17.4 million par amount of commercial
mortgage backed securities (CMBS) which are collateralized by a pool of 135
mortgage loans backed by 141 properties, with 43.7% of the properties located in
Texas, California
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and Florida. The acquired securities represent 93.5% of the "B-" rated class and
79.5% of the unrated class of an existing CMBS issue. In a subsequent
transaction, OAIC acquired, on December 3,1997, the remaining balance of the
"B-" class, the unrated class and the special servicing rights with respect to
this portfolio. OAIC has engaged Ocwen Federal Bank FSB (Ocwen), a wholly owned
subsidiary of Ocwen Financial Corporation, to special service the loans. Ocwen
is one of only five firms to receive Standard & Poor's highest Special Servicing
ranking of "Strong" for commercial loans. The current weighted average debt
service coverage on the entire portfolio is estimated to be 1.45x with a
weighted average LTV of approximately 73.9%.
DISCOUNTED LOANS
OAIC, in a joint bid with Ocwen, won a pool of distressed loans in which OAIC
purchased two loans which are near the completion of the foreclosure process.
OAIC closed the transaction for $3.3 million on November 13, 1997. The loans are
secured by two properties, a 195,445 square foot shopping center in Havre,
Montana and a 43,205 square foot Dayton, Ohio office building, with combined
unpaid principal balances of approximately $6.6 million. The note holder is
currently in control of both properties which should enable OAIC to take title
to the properties without incurring significant foreclosure expenses.
RESIDENTIAL WHOLE LOANS
During the month of November, OAIC closed two pools of residential loans with
unpaid principal balances of approximately $375,000. The loans carry a weighted
average coupon of 11.65% and were purchased at a weighted average cost of 72.8%.
OAIC intends to accumulate residential loans and execute a securitization, to
effectively retain a subordinate interest.
MEZZANINE FINANCING AND CONSTRUCTION LENDING
On November 21, 1997, OAIC closed a $13.3 million loan for the acquisition and
renovation of a hotel located in Wilmington, Delaware which had an initial draw
of $3.3 million. The loan has a term of four years, carries an interest rate of
LIBOR plus 300 basis points and an exit fee of 1.5%. Jordan Paul stated, "This
project is located in the central business district of Wilmington which has
pent-up hotel demand and significant barriers to entry. Upon completion of the
construction, the hotel will be converted to a Wyndham Garden Hotel, thereby,
improving its position in the marketplace."
OAIC specializes in opportunistic real estate investments and to date has
invested 64% of the proceeds from its initial public offering, which closed on
May 19, 1997.
CERTAIN STATEMENTS CONTAINED HEREIN ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE SECURITIES ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS
MAY BE IDENTIFIED BY REFERENCE TO A FUTURE PERIOD(S) OR BY THE USE OF
FORWARD-LOOKING TERMINOLOGY SUCH AS "ANTICIPATES" OR "EXPECTS". ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE INDICATED IN
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SUCH STATEMENTS DUE TO A VARIETY OF FACTORS, INCLUDING, BUT NOT LIMITED TO,
CHANGES IN INTERNATIONAL, NATIONAL, REGIONAL OR LOCAL ECONOMIC ENVIRONMENTS,
COMPETITIVE PRODUCTS AND PRICING, GOVERNMENT FISCAL AND MONETARY POLICIES,
CHANGES IN PREVAILING INTEREST RATES, THE TIMING OF TRANSACTION CLOSINGS,
UNSATISFACTORY DUE DILIGENCE RESULTS, BORROWER FAILURE TO SATISFY CLOSING
CONDITIONS AND OTHER FACTORS GENERALLY UNDERSTOOD TO AFFECT THE REAL ESTATE
ACQUISITION, MORTGAGE AND LEASING MARKETS AND SECURITY INVESTMENTS.
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