UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 23, 1998
-------------
OCWEN ASSET INVESTMENT CORP.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 000-22389 65-0736120
- --------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
THE FORUM, SUITE 1000
1675 PALM BEACH LAKES BOULEVARD, WEST PALM BEACH, FLORIDA 33401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (561) 681-8000
--------------
N/A
- --------------------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
PAGE 1 OF 10
EXHIBIT INDEX ON PAGE 4
<PAGE>
ITEM 5 OTHER EVENTS
The news release of Ocwen Asset Investment Corp. dated July 23, 1998, announcing
the results for the second quarter of 1998 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 July 23,
1998.
2
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, 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
---------------------------------
Mark S. Zeidman
Senior Vice President
and Chief Financial Officer
Date: July 24, 1998
3
<PAGE>
EXHIBIT NO. DESCRIPTION PAGE
99 News release of Ocwen Asset Investment Corp. dated 5
July 23, 1998, announcing the results for the second
quarter of 1998.
4
- --------------------------------------------------------------------------------
Ocwen Asset Investment Corp. EXHIBIT 99
1675 Palm Beach Lakes Boulevard
West Palm Beach, FL 33401
NYSE Symbol: OAC
- --------------------------------------------------------------------------------
NEWS RELEASE: IMMEDIATE JULY 23, 1998
OCWEN ASSET INVESTMENT CORP. ANNOUNCES STRONG RESULTS FOR THE SECOND QUARTER
SECOND QUARTER HIGHLIGHTS
o POSTED RECORD NET INCOME OF $6.6 MILLION, THE HIGHEST ACHIEVED FOR ANY
QUARTER
o ACHIEVED RECORD FFO OF $0.39 PER SHARE FOR THE SECOND QUARTER
o CLOSED TRANSACTION VOLUME OF $352.8 MILLION FOR THE QUARTER, THE LARGEST
VOLUME OF TRANSACTIONS CLOSED IN ANY QUARTER
o CLOSED TOTAL TRANSACTIONS SINCE THE IPO TOTALING $845.9 MILLION, OF WHICH
$779.6 MILLION WERE FUNDED
WEST PALM BEACH, FL - Ocwen Asset Investment Corp. (NYSE: OAC) today reported
funds from operations ("FFO") of $0.39 per share for the quarter ended June 30,
1998, as compared to $0.11 per share for the period May 14, 1997 to June 30,
1997, the comparable period in 1997 (which began on the date OAC completed its
initial public offering). FFO for the quarter was the highest achieved for any
quarter to date since OAC went public 14 months ago. OAC reported net income of
$6.6 million, or $0.35 per share, for the quarter ended June 30, 1998, compared
to net income of $2.1 million, or $0.11 per share, for the period May 14, 1997
to June 30, 1997. Christine A. Reich, President of OAC, stated, "We are pleased
with the strong second quarter results. Net income for the second quarter is the
highest reported to date for any quarter at OAC, reflecting our disciplined
approach to investing in opportunistic assets that we believe have the ability
to provide significant risk-adjusted returns to our shareholders by leveraging
the recognized servicing and transactional expertise of Ocwen Financial
Corporation (NYSE: OCN)."
OAC also announced today that for the quarter ended June 30, 1998, it has closed
transactions totaling approximately $352.8 million, of which $347.5 has been
funded. This activity brings OAC's total closed transactions since its initial
public offering, net of repayments, to $845.9 million as of June 30, 1998. Of
this amount, $779.6 million has been funded and the remaining $66.3 million is
to be funded over the construction and renovation periods, which range from 6 to
30 months.
SELECTED OPERATING RESULTS
<TABLE>
<CAPTION>
Three months ended Six months ended May 14, 1997
June 30, 1998 June 30, 1998 To June 30,1997
- --------------------------------------------- ------------------------- ----------------------- ------------------------
Dollars in thousands, except per share data Amount Per Share(1) Amount Per Share(1) Amount Per Share(1)
- --------------------------------------------- ------ ------------ ------ ------------ ------ ------------
Operating results:
<S> <C> <C> <C> <C> <C> <C>
Revenues.................................. $ 19,860 $ 26,256 $ 2,483
Expenses.................................. 13,214 16,156 423
Gain (loss) on securities held for trading -- (13,958) --
Net income (loss)......................... 6,646 $ 0.35 (3,858) $ (0.20) 2,060 $ 0.11
Funds from operations..................... 7,405 0.39 11,162 0.58 2,060 0.11
Dividends................................. 0.41(2) 0.66(2) 0.10
Diluted Weighted average common shares
outstanding ............................... 19,088 19,184 19,390
</TABLE>
(1) Per share amounts are based on diluted weighted average common shares
outstanding.
(2) Does not include June 1998 special dividend of $0.08 per share attributable
to OAC's remaining undistributed 1997 taxable income.
- --------------------------------------------------------------------------------
Contacts Mark S. Zeidman (561) 682-8600
Christine A. Reich (561) 682-8569
- --------------------------------------------------------------------------------
5
<PAGE>
Ocwen Asset Investment Corp. (OAC)
Second Quarter Results
July 23, 1998
<TABLE>
<CAPTION>
SELECTED BALANCE SHEET ITEMS June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Assets:
Cash and cash equivalents ................................ $ 13,101 $ 48,677
Securities available for sale ............................ 415,933 146,027
Commercial and Multifamily loans, net .................... 44,866 --
Residential loans, net ................................... 138,669 15,831
Discount loans, net ...................................... 8,512 26,979
Investment in real estate, net ........................... 176,925 45,430
Liabilities:
Securities sold under agreements to repurchase ........... 223,820 --
Obligations outstanding under line of credit ............. 154,179 --
Obligations outstanding under line of credit - Real estate 115,236 --
Total shareholders' equity ................................. 273,681 271,258
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------
SELECTED PERFORMANCE HIGHLIGHTS For the three For the six For the period
months ended months ended May 14,1997 to
June 30, 1998 June 30, 1998 June 30, 1997
------------- ------------- --------------
<S> <C> <C> <C>
Annualized yields
Repurchase agreements and interest-bearing deposits ....... 4.00% 5.01% 5.36%
Securities held for trading ............................... (7.49) (16.45) --
Securities available for sale ............................. 14.46 14.36 16.38
Commercial and Multifamily loan portfolio, net ............ 14.52 13.91 --
Residential loan portfolio, net ........................... 7.38 7.46 --
Discount loans, net ....................................... 18.30 14.81 6.18
Investments in Real estate ................................ 5.19(1) 5.89(1) --(1)
Total (2) ................................................. 10.22% 9.07% 7.56%
Annualized rates
Securities sold under agreements to repurchase ............ 7.61% 7.46% --%
Obligation outstanding under line of credit ............... 6.81 6.80 --
Obligation outstanding under line of credit - Real estate . 7.94 7.94 --
Total ..................................................... 7.41% 7.35% --%
Net interest margin.......................................... 6.00% 5.94% 7.56%
</TABLE>
(1) Yield is determined based upon real estate--net income plus depreciation and
interest expense.
(2) The annualized yield for the three months and six months ended June 30, 1998
would have amounted to 10.75% and 11.06%, respectively, exclusive of the
securities held for trading.
6
<PAGE>
Ocwen Asset Investment Corp. (OAC)
Second Quarter Results
July 23, 1998
SELECTED RECENT DEVELOPMENTS
On June 11, 1998, OAC purchased for $13.1 million, a non rated subordinate
interest collateralized by a pool of 1,414 first lien subprime mortgage loans.
Ocwen Federal Bank FSB, a wholly-owned subsidiary of OCN ("OFB"), is the master
servicer and servicer for these loans.
On June 15, 1998, OAC closed a $7.6 million commercial real estate loan to
construct a 6-story, 183,000 square foot, 136-suite hotel, located in a Chicago
suburb of Schaumburg, Illinois.
On June 18, 1998, OAC purchased for $13.9 million, a non rated subordinate
interest collateralized by a pool of 2,432 loans consisting of subprime
closed-end adjustable rate and fixed rate, fully amortizing and balloon loans.
OFB is the special servicer of any loans which are 60 days or more delinquent.
On July 22, 1998, OAC closed the previously announced transaction to acquire the
Prudential Building, a 488,080 square foot, 22 story office building in the
central business district of Jacksonville, Florida for an aggregate purchase
price of $36.0 million, plus closing costs. The purchase price was funded with
cash on hand and advances from OAC's line of credit with Salomon Brothers Realty
Corp. Simultaneous with this closing, OAC also leased 97% of the building back
to the Prudential Insurance Co. of America, and sold two parcels of adjacent
parking areas to an adjacent hospital for approximately $4.1 million. The
Prudential lease has a term of four years with options to vacate the premises
during the term of the lease as well as three subsequent extension options. OAC
also entered into an agreement with the hospital pursuant to which the hospital
is to lease up to 150,000 square feet in the Prudential Building for a nine-year
period should Prudential exercise its termination option.
SELECTED RECENT COMMITMENTS
Currently, OAC has outstanding commitments of $43.7 million in commercial real
estate construction and renovation loans.
Each of these commitments is subject to various closing conditions including,
but not limited to, completion of satisfactory due diligence efforts, the
negotiation of definitive purchase and sales agreements and/or conditions the
borrowers or sellers must satisfy prior to OAC funding the transactions.
OTHER
Ocwen Asset Investment Corp., a hybrid mortgage REIT headquartered in West Palm
Beach, Florida, invests in distressed commercial real estate, subordinate
commercial mortgage-backed securities and subordinate and residual interests in
residential mortgage-backed securities. OAC generally looks for opportunities to
acquire these assets and leverage the special servicing and transactional
capabilities of its manager, OCN, in order to realize above average yields or
wider spreads. Using a disciplined approach to real estate investing, OAC seeks
to uncover and invest in higher-yielding assets.
CERTAIN STATEMENTS CONTAINED HEREIN ARE NOT BASED ON HISTORICAL FACTS AND 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, WHICH ARE BASED ON VARIOUS
ASSUMPTIONS (SOME OF WHICH ARE BEYOND OAC'S CONTROL), MAY BE IDENTIFIED BY
REFERENCE TO A FUTURE PERIOD(s) OR BY THE USE OF FORWARD-LOOKING TERMINOLOGY
SUCH AS "BELIEVE," "COMMITMENT," FUTURE OR CONDITIONAL VERB TENSES, SIMILAR
TERMS, VARIATIONS ON SUCH TERMS OR NEGATIVES OF SUCH TERMS. ALTHOUGH OAC
BELIEVES THE ANTICIPATED RESULTS OR OTHER EXPECTATIONS REFLECTED IN SUCH
FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, IT CAN GIVE NO
ASSURANCE THAT THOSE RESULTS OR EXPECTATIONS WILL BE ATTAINED. ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE INDICATED IN SUCH STATEMENTS DUE TO RISKS,
UNCERTAINTIES AND CHANGES WITH RESPECT TO A VARIETY OF FACTORS, INCLUDING, BUT
NOT LIMITED TO, INTERNATIONAL, NATIONAL, REGIONAL, OR LOCAL ECONOMIC
ENVIRONMENTS, GOVERNMENT FISCAL AND MONETARY POLICIES, PREVAILING INTEREST OR
CURRENCY EXCHANGE RATES, GOVERNMENT REGULATIONS AFFECTING REAL ESTATE INVESTMENT
TRUSTS, COMPETITIVE PRODUCTS AND PRICING, CREDIT, PREPAYMENT, BASIS AND
ASSET/LIABILITY RISKS, LOAN SERVICING EFFECTIVENESS, INTEGRATION OF ACQUIRED
7
<PAGE>
Ocwen Asset Investment Corp. (OAC)
Second Quarter Results
July 23, 1998
ASSETS AND BUSINESSES, THE FINANCIAL AND SECURITIES MARKETS, THE AVAILABILITY OF
AND COSTS ASSOCIATED WITH OBTAINING ADEQUATE AND TIMELY SOURCES OF LIQUIDITY,
DEPENDENCE ON EXISTING SOURCES OF FUNDING, THE SIZE AND NATURE OF THE SECONDARY
MARKET FOR MORTGAGE LOANS AND THE MARKET FOR SECURITIZATIONS, GEOGRAPHIC
CONCENTRATIONS OF ASSETS, OTHER FACTORS GENERALLY UNDERSTOOD TO AFFECT THE REAL
ESTATE ACQUISITION, MORTGAGE AND LEASING MARKETS AND SECURITIES INVESTMENTS, AND
OTHER RISKS DETAILED FROM TIME TO TIME IN OAC'S REPORTS AND FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING ITS REGISTRATION STATEMENT ON FORM
S-11 AND PERIODIC REPORTS ON FORMS 10-Q, 8-K AND 10-K. OAC DOES NOT UNDERTAKE,
AND SPECIFICALLY DISCLAIMS ANY OBLIGATION, TO PUBLICLY RELEASE THE RESULTS OF
ANY REVISIONS WHICH MAY BE MADE TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT THE
OCCURRENCE OF ANTICIPATED OR UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE
DATE OF SUCH STATEMENTS.
ATTACHED ARE THE CONSOLIDATED FINANCIAL STATEMENTS.
8
<PAGE>
Ocwen Asset Investment Corp. (OAC)
Second Quarter Results
July 23, 1998
OCWEN ASSET INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited) (Audited)
------------- -------------
<S> <C> <C>
ASSETS
Cash and amounts due from depository institutions ...................... $ 11,764,015 $ 331,047
Interest bearing deposits .............................................. 1,336,511 48,346,076
Securities available for sale, at market value ......................... 415,933,375 146,026,907
Commercial and Multifamily loan portfolio, net ......................... 44,866,458 --
Residential loan portfolio, net ........................................ 138,668,931 15,831,479
Discount loan portfolio, net ........................................... 8,511,730 26,978,888
Investment in real estate, net ......................................... 176,925,349 45,430,039
Principal and interest receivable ...................................... 13,157,828 2,518,272
Deposits on pending asset acquisitions ................................. 503,500 1,000,000
Other assets ........................................................... 10,382,508 1,540,633
------------- -------------
$ 822,050,205 $ 288,003,341
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Securities sold under agreements to repurchase ..................... $ 223,819,860 $ --
Obligation outstanding under line of credit ........................ 154,179,487 --
Obligation outstanding under line of credit - secured by Real estate 115,235,500 --
Dividends and distributions payable ................................ 10,179,129 7,458,750
Accrued expenses, payables and other liabilities ................... 15,069,491 6,344,783
------------- -------------
518,483,467 13,803,533
------------- -------------
Minority interest ...................................................... 29,885,939 2,941,541
------------- -------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 25,000,000 shares authorized;
0 shares issued and outstanding .................................. -- --
Common Stock, $.01 par value; 200,000,000 shares authorized;
18,965,000 shares issued and outstanding
at June 30, 1998 and December 31, 1997 ........................... 189,650 189,650
Additional paid-in capital ......................................... 294,461,432 280,503,838
Distributions in excess of earnings ................................ (19,999,538) (2,107,331)
Unrealized gain (loss) on securities available for sale ............ 81,221 (7,327,890)
Accumulative translation adjustments ............................... (1,051,966) --
------------- -------------
Total stockholders' equity ....................................... 273,680,799 271,258,267
------------- -------------
$ 822,050,205 $ 288,003,341
============= =============
</TABLE>
9
<PAGE>
Ocwen Asset Investment Corp. (OAC)
Second Quarter Results
July 23, 1998
OCWEN ASSET INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the For the For the Period
Three months Six months May 14, 1997
ended ended to
June 30, 1998 June 30, 1998 June 30, 1997
------------- ------------- -------------
<S> <C> <C> <C>
Interest income:
Repurchase agreements and interest bearing deposits .......... $ 97,510 $ 295,648 $ 1,397,128
Securities held for trading .................................. (375,300) (3,012,559) --
Securities available for sale ................................ 11,534,635 16,183,217 1,005,184
Commercial and Multifamily loans ............................. 1,467,916 2,273,702 --
Residential loans ............................................ 2,178,010 2,613,031 --
Discount loans ............................................... 423,421 1,326,198 80,495
------------ ------------ ------------
15,326,192 19,679,237 2,482,807
------------ ------------ ------------
Interest expense:
Securities sold under agreements to repurchase ............... 3,302,044 3,966,815 --
Obligations outstanding under lines of credit ................ 2,244,723 2,273,769 --
------------ ------------ ------------
5,546,767 6,240,584 --
------------ ------------ ------------
Net interest income before provision for loan losses ......... 9,779,425 13,438,653 2,482,807
Provision for loan losses ...................................... 100,976 206,049 --
------------ ------------ ------------
Net interest income after provision for loan losses .......... 9,678,449 13,232,604 2,482,807
------------ ------------ ------------
Real estate-Operating income
Rental income ................................................ 4,515,204 6,549,491 --
Other ........................................................ 18,978 26,835 --
------------ ------------ ------------
4,534,182 6,576,326 --
------------ ------------ ------------
Real estate-Operating expenses
Rental operation ............................................. 2,342,105 3,275,851 --
Depreciation & amortization .................................. 758,484 1,062,921 --
Interest ..................................................... 1,689,103 1,689,103 --
------------ ------------ ------------
4,789,692 6,027,875 --
------------ ------------ ------------
Real estate-Net Income ......................................... (255,510) 548,451 --
------------ ------------ ------------
Other expenses:
Management fees .............................................. 1,704,751 2,533,632 341,000
Due diligence expenses ....................................... 174,955 367,644 --
Foreign currency (gain) loss ................................. -- (116,953) --
Other ........................................................ 386,439 576,094 81,583
------------ ------------ ------------
2,266,145 3,360,417 422,583
------------ ------------ ------------
Gain (loss) on securities held for trading ..................... 34 (13,957,594) --
------------ ------------ ------------
Income (loss) before minority interest ...................... 7,156,828 (3,536,956) 2,060,224
Minority interest in net income of operating partnership ....... (510,696) (321,154) --
------------ ------------ ------------
Net (loss) income ......................................... $ 6,646,132 $ (3,858,110) $ 2,060,224
============ ============ ============
Earnings per share:
Basic ..................................................... $ 0.35 $ (0.20) $ 0.11
============ ============ ============
Diluted ................................................... $ 0.35 $ (0.20) $ 0.11
============ ============ ============
Weighted average shares outstanding:
Basic ..................................................... 18,965,000 18,965,000 19,390,194
============ ============ ============
Diluted ................................................... 19,088,026 19,184,437 19,390,194
============ ============ ============
</TABLE>
10
