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): FEBRUARY 6, 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 6
EXHIBIT INDEX ON PAGE 4
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ITEM 5. OTHER EVENTS
The news release of Ocwen Asset Investment Corp. dated February 6, 1998,
regarding its January 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
February 6, 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: February 9, 1998
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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
February 6, 1998 regarding its January investment
activity.
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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 FEBRUARY 6, 1998
OCWEN ASSET INVESTMENT CORP. ANNOUNCES JANUARY INVESTMENT ACTIVITY
Ocwen Asset Investment Corp. (NASDAQ: OAIC) today announced that for the month
of January 1998 it had closed transactions totaling $88.6 million, for which it
funded $78.6 million. Of the January 1998 activity, OAIC closed a: $51.6 million
investment in a subordinated interest-only security supported by subprime
residential mortgages ("Sub IO"); $13.7 million office property acquisition;
$11.6 million mezzanine construction loan (for which $1.6 million was funded);
$6.5 million investment in other mortgage related securities; and $5.2 million
investment in residential whole loans. Christine A. Reich, President of OAIC,
stated, "We are pleased with the progress that we have made to date in the
acquisition of Sub IOs collateralized by subprime residential mortgage loans,
and believe that Ocwen Federal Bank FSB's expertise as special servicer will be
a necessary element in achieving OAIC's targeted returns on this investment."
This activity brings OAIC's total closed transactions since its initial public
offering, net of repayments to date, to $368.4 million as of January 31, 1998.
Of this amount, $318.6 million has been funded and $49.8 million is to be funded
over the construction and renovation periods, which range from 6 to 15 months.
These transactions were funded using net proceeds from the initial public
offering and a $52.8 million reverse repurchase agreement. In addition, OAIC has
outstanding commitments of $161.7 million, and is actively pursuing additional
financing.
Separately, OAIC's interest-only and inverse interest-only securities portfolio
(collectively "IOs") had an approximate book value and market value of $56.2
million and $47.9 million, respectively, as of January 31, 1998. These IOs are
rated AAA and are issued both privately and by government sponsored enterprises
from pools of prime residential mortgages. As a result of an increase in
projected prepayment speeds at the end of January 1998, OAIC will take a $2.2
million charge to earnings on certain individual securities during the month
even though OAIC estimates that the remaining yield to maturity on its IO
portfolio as a whole, assuming January 31, 1998 pricing levels, will approximate
15.7%. This charge to earnings and the decline in the current yield from the
purchased yield has the potential to reduce expected first quarter earnings and
funds from operations by approximately $0.16 to $0.20 per share and to reduce
expected second quarter earnings and funds from operations by approximately
$0.03 per share. OAIC does not believe that these adjustments, however, will
have a material impact on the expected dividends paid during these periods.
Christine A. Reich, President of OAIC stated, "Based upon January 1998 pricing
levels, the IO portfolio is expected to yield 13.0% over its life. While this
yield is less than the 18.0% yield anticipated at acquisition, it is still an
attractive yield as compared to other potential investments. The current period
charge in reported earnings on the IO portfolio results from the accounting
requirement to write-down individual securities for losses that are other than
temporary, while OAIC's investment strategy is to manage the overall yield on
the portfolio taken as a whole." Actual results may vary from those projected as
a result of the future interest rate environment. Generally, OAIC's IO portfolio
would benefit from a decline in prepayment speeds (which typically result from
an increase in long term interest rates), a reduction in LIBOR or a further
steepening of the yield curve. Conversely, OAIC's IO portfolio may be further
adversely affected by an increase in prepayment speeds (which generally result
from a decline in long term interest rates), an increase in LIBOR or a
flattening of the yield curve.
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Contacts Christine A. Reich 561-682-8569
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William C. Erbey 561-682-8520
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REVIEW OF OUTSTANDING COMMITMENTS
At January 31, 1998, OAIC's outstanding commitments stand at $161.7 million and
include: $101.1 million of mortgage loans secured by single-family residences; a
commercial real estate loan for $23.1 million with an initial funding of
approximately $5.4 million; a $30.3 million real estate loan with an initial
funding of approximately $13.0 million; and a $7.2 million investment in a Sub
IO. Each of these commitments are expected to close at the end of February or
early March, 1998, and are subject to various closing conditions, including, but
not limited to, completion of satisfactory due diligence efforts and conditions
the borrowers or sellers must satisfy prior to OAIC funding the transactions. In
addition, a commercial real estate loan in the amount of $26.7 million that OAIC
anticipated would close in March 1998, has been deferred as negotiations with
the borrower continue.
As previously announced, OAIC has entered into a nonbinding letter of intent
with Aames Financial Corporation pursuant to which the parties are negotiating
for OAIC to acquire Sub IOs with respect to up to $600 million of subprime
residential mortgage loans originated or acquired by Aames during the first
calendar quarter of 1998. Those negotiations are proceeding.
REVIEW OF JANUARY 1998 TRANSACTIONS
SUBORDINATED INTEREST ONLY INVESTMENT
On January 30, 1998, OAIC purchased a $51.6 million investment in a Sub IO
supported by a pool of 6,309 subprime mortgage loans. Ocwen Federal Bank FSB, a
wholly owned subsidiary of Ocwen Financial Corporation (NYSE: OCN) will special
service any loans that become 60 days delinquent. The average balance of the
loans is $95,110 and the geographical concentration is mainly in California,
Florida, Illinois, Massachusetts and Washington.
REAL ESTATE ACQUISITION
On January 23, 1998, OAIC purchased for $13.7 million, a 16 story, 124,688
square foot office property located at 690 Market Street, San Francisco,
California. The building is 83% leased with 40% of the building becoming
available for re-leasing by the end of 1998. OAIC anticipates investing an
additional $4.3 million to reposition the building.
MEZZANINE FINANCING AND CONSTRUCTION LENDING
On January 12, 1998, OAIC closed a $11.6 million mezzanine construction loan for
a 160 unit apartment rental project with on-site parking and commercial space on
the first floor located in San Francisco, California which had an initial draw
of $1.6 million.
RESIDENTIAL WHOLE LOANS
During the month of January, OAIC closed two pools of residential loans with
unpaid principal balances totaling approximately $5.2 million. The loans carry a
weighted average coupon of 8.31%. OAIC intends to accumulate residential loans
and execute a securitization, to effectively retain a subordinate interest.
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 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 INTEREST RATES, THE TIMING
OF TRANSACTION CLOSINGS, UNSATISFACTORY DUE DILIGENCE RESULTS, BORROWER FAILURE
TO SATISFY CLOSING CONDITIONS, A MATERIAL CHANGE IN FACTORS INHERENT TO THE
PRICING OF VARIOUS SECURITIES INCLUDING THE IMPACT OF CHANGES IN PREPAYMENT
SPEEDS ON MORTGAGE LOANS, THE EFFECTIVENESS OF THE SERVICING UNDERLYING VARIOUS
SECURITIES, THE ABILITY TO OBTAIN ADEQUATE AND TIMELY THIRD-PARTY FINANCING AND
OTHER FACTORS GENERALLY UNDERSTOOD TO AFFECT THE REAL ESTATE ACQUISITION,
MORTGAGE AND LEASING MARKETS AND SECURITY INVESTMENTS.
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