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): MARCH 19, 1998
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 7
Exhibit Index on Page 4
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ITEM 5. OTHER EVENTS
The news release of Ocwen Asset Investment Corp. dated March 19, 1998,
announcing its first quarter 1998 dividend and February 1998 investment
activity, 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 March 19,
1998.
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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: March 23, 1998
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INDEX TO EXHIBIT
EXHIBIT NO. DESCRIPTION PAGE
99 News release of Ocwen Asset Investment Corp. dated 5
March 19, 1998 announcing its first quarter 1998
dividend and February 1998 investment activity.
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Exhibit 99
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Ocwen Asset Investment Corp.
1675 Palm Beach Lakes Boulevard
West Palm Beach, FL 33401
NASDAQ Symbol: OAIC
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NEWS RELEASE: IMMEDIATE MARCH 19, 1998
OCWEN ASSET INVESTMENT CORP. ANNOUNCES FIRST QUARTER 1998 DIVIDEND AND FEBRUARY
1998 INVESTMENT ACTIVITY
Ocwen Asset Investment Corp. (NASDAQ: OAIC) declared its first quarter 1998 cash
dividend of $0.25 per share, payable to shareholders of record on March 30, 1998
with payment on April 16, 1998. Christine A. Reich, OAIC President, stated, "The
decline in the first quarter 1998 dividend as compared to the fourth quarter
1997 dividend is due to the estimated impact on taxable income of faster
prepayment speeds on OAIC's interest-only and inverse interest-only securities
portfolio during the first quarter of 1998 (approximately $0.06 per share), the
inclusion of $1.12 million of income from a lease buyout in the fourth quarter
of 1997 (approximately $0.06 per share) and the distribution in the fourth
quarter of 1997 of taxable income generated in prior quarters."
OAIC also announced today that for the month of February 1998 it had closed
transactions totaling $37.3 million with $20.3 million funded. The remaining
disbursements will occur during the construction and renovation period. In
February 1998, OAIC closed: the acquisition of $1.2 million of investments in
government agency interest-only securities; the origination of a $30.3 million
construction loan (for which $13.2 million was funded); and the acquisition of
$5.8 million in residential whole loans. This activity brings OAIC's total
closed transactions since its initial public offering, net of repayments to
date, to $399.7 million as of February 28, 1998. Of this amount, $334.2 million
has been funded and $65.5 million is to be funded over the construction and
renovation periods, which range from 6 to 30 months.
In addition, as of March 17, 1998 OAIC had outstanding commitments of $243.8
million. OAIC is actively pursuing the establishment of additional financing
arrangements to fund these acquisitions. Christine A. Reich, OAIC President,
stated, "We are very pleased with our recent level of investment activity. The
targeted assets are strategic, as they leverage our core competencies and are
consistent with our long-term investment objectives. Of course, some of these
transactions are subject to further due diligence and various terms and
conditions of closing and performance, but we are encouraged by the prospect of
significantly increasing our invested asset base over the next several months."
VIEW OF FEBRUARY 1998 TRANSACTIONS
GOVERNMENT AGENCY INTEREST ONLY INVESTMENT
OAIC purchased $1.2 million of investments in government agency interest-only
securities which were issued from pools of prime residential mortgages.
MEZZANINE FINANCING AND CONSTRUCTION LENDING
On February 27, 1998, OAIC closed a $30.3 million commercial real estate
construction loan to acquire and convert a 155,000 square foot office building
into 52 luxury loft-style residential condominiums with a parking garage located
in the historic Tribeca area of Manhattan, New York. This loan had an initial
draw of $13.2 million and has a five year term.
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Contact Christine A. Reich (561) 681-8569
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RESIDENTIAL WHOLE LOANS
During the month of February, OAIC closed three pools of residential whole loans
with unpaid principal balances totaling $5.8 million. The loans have a weighted
average coupon of 8.20%. OAIC intends to accumulate residential loans and
execute a securitization, to effectively retain a subordinate interest.
REVIEW OF OUTSTANDING COMMITMENTS
At February 28, 1998, OAIC's outstanding commitments consisted of the following:
$96.0 million of mortgage loans secured by single-family residences; $25 million
of subordinate interests in commercial mortgage-backed securities; and $8.3
million of subordinate interest-only securities issued from a securitization of
subprime residential mortgage loans ("Sub IOs"). These transactions are expected
to close at the end of March and early April 1998.
On March 6, 1998, OAIC executed a definitive purchase agreement for the
acquisition of an existing 536,000 square foot, 22 story Class A- office
building located at 225 Bush Street in the financial district of San Francisco,
California for $100.2 million. OAIC expects to make an additional investment of
approximately $10.5 million to fund closing costs and commissions, construction
costs associated with mechanical systems and cosmetic upgrades, and tenant
improvements and leasing commissions. Current rents in the building average
$18.30 per square foot, and OAIC estimates the average current market rent to
approximate $32 to $35 per square foot. As a result of the nearly 60% turnover
of the rental space in 1998 and 1999, OAIC expects its funds from operations
during 1998 will provide a modest return on this investment. As is typical of
many of OAIC's commercial real estate investments, future releasing of this
property at market rates is anticipated to provide stronger contributions to
funds from operations thereafter and to meet OAIC's desired return parameters
over the expected holding period of the investment.
On March 17, 1998, OAIC executed a definitive agreement with a Wall Street firm
concerning the acquisition of a Sub IO for approximately $14.3 million plus
closing costs (such transaction constitutes the result of negotiations pursuant
to the letter of intent announced by OAIC and Aames Financial Corporation in
January 1998).
Each of these commitments is subject to various terms and conditions of closing
and performance, which may include, but are not limited to, completion of
satisfactory due diligence, negotiation of definitive purchase and sales
agreements and/or satisfaction or fulfillment of various terms and conditions by
the borrowers or sellers prior to funding by OAIC. As a result, there can be no
assurance that any of these transactions will be consummated.
OTHER
OAIC previously reported a commercial real estate loan in the amount of $23.1
million that was expected to close in March 1998. This loan has been deferred as
negotiations with the borrower continue.
As of February 28, 1998, OAIC continued to hold a portfolio of interest-only and
inverse interest-only securities (together, "IOs") having an amortized cost of
$54.3 million and a market value of $46.4 million on such date. As of February
28, 1998, OAIC identified no significant changes to the overall composition and
valuation of the portfolio, as the relationship of LIBOR (5.69%) to the ten year
treasury rate (5.63%) continued to be inverted by six basis points, and
prepayment speeds have remained relatively constant. The income recognized on
the portfolio continues to be adversely affected, however, by certain individual
securities whose performance has declined as of the end of February 1998. Based
upon the February 1998 activity, OAIC estimates that the prospective yield to
maturity as of February 18, 1998, based upon amortized cost of the IO portfolio,
will approximate 15.2%, assuming no further changes in interest rates or market
consensus prepayment speeds. Because those IOs with a shorter average life also
have a lower yield than the average for the IO portfolio as a whole, the near
term yield on the IO portfolio is expected to be less than the prospective yield
to maturity. OAIC expects that the cumulative impact of the charge to earnings
and decline in current yield through February 1998, will reduce first quarter
earnings and funds from operations by a range of approximately $0.18 to $0.22
per share, and that the impact on the second quarter earnings and funds from
operations may range from $0.03 to $0.06 per share.
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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, INCLUDING, BUT NOT LIMITED TO,
THE CONSUMMATION AND EXPECTED BENEFITS OF THE TRANSACTIONS. THESE
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY REFERENCE TO A FUTURE PERIOD(S)
OR BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "ANTICIPATE," "ENCOURAGE,"
"PROSPECT," "CONSIDER," "BELIEVE," "ESTIMATE," "COMMITMENT," "PROPOSE,"
"EXPECT," VARIATIONS OF THE FOREGOING TERMINOLOGY, OR FUTURE OR CONDITIONAL VERB
TENSES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE INDICATED IN SUCH
STATEMENTS DUE TO A VARIETY OF FACTORS, INCLUDING, BUT NOT LIMITED TO, CHANGES
IN INTERNATIONAL, NATIONAL, REGIONAL OR LOCAL ECONOMIC ENVIRONMENTS, CHANGES IN
GOVERNMENT FISCAL AND MONETARY POLICIES, CHANGES IN PREVAILING INTEREST RATES,
COMPETITIVE PRODUCTS AND PRICING, CHANGES IN FACTORS INHERENT TO THE VALUATION
AND PRICING OF VARIOUS SECURITIES INCLUDING THE IMPACT OF CHANGES IN PREPAYMENT
SPEEDS ON MORTGAGE LOANS, THE EFFECTIVENESS OF THE SERVICING OF LOANS UNDERLYING
VARIOUS SECURITIES, THE COURSE OF NEGOTIATIONS, THE ABILITY OF THE PARTIES TO
AGREE TO MATERIAL TERMS OF A TRANSACTION, THE ABILITY TO SATISFY OR FULFILL
AGREED UPON TERMS AND CONDITIONS OF CLOSING OR PERFORMANCE (INCLUDING BOARD
APPROVALS, AS NECESSARY OR AGREED UPON), THE OCCURRENCE OF MATERIAL ADVERSE
CHANGES IN THE BUSINESS OF EITHER PARTY, THE TIMING OF TRANSACTION CLOSINGS,
UNSATISFACTORY DUE DILIGENCE RESULTS, BORROWER FAILURE TO SATISFY CLOSING
CONDITIONS, THE ABILITY TO SECURITIZE MORTGAGE LOANS ON MUTUALLY ACCEPTABLE
TERMS, THE ABILITY TO OBTAIN ADEQUATE AND TIMELY THIRD-PARTY FINANCING ON
MUTUALLY ACCEPTABLE TERMS, AND OTHER FACTORS GENERALLY UNDERSTOOD TO AFFECT THE
REAL ESTATE ACQUISITION, MORTGAGE AND LEASING MARKETS AND SECURITY INVESTMENTS.
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