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
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 7, 1999
OCWEN ASSET INVESTMENT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 001-14043 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) (ZIP CODE)
(561) 682-8000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 5. OTHER EVENTS
Two news releases of Ocwen Asset Investment Corp. ("OAC"), dated May 7, 1999,
announcing: (i) first quarter 1999 results and (ii) that its Special Committee
of Independent Directors has engaged PaineWebber to act as financial advisor,
are attached hereto and filed herewith as Exhibit 99.1 and 99.2, respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits
(99.1) News release of Ocwen Asset Investment Corp. dated May 7, 1999,
announcing first quarter 1999 results.
(99.2) News release of OAC, dated May 7, 1999, announcing its Special
Committee of Independent Directors has engaged Paine Webber to act as
financial advisor.
2
<PAGE>
SIGNATURES
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: May 10, 1999
3
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
99.1 News release of Ocwen Asset Investment 5
Corp. dated May 7, 1999, announcing first
quarter 1999 results.
99.2 News release of OAC, dated May 7, 1999, 13
announcing its Special Committee of
Independent Directors has engaged Paine
Webber to act as financial advisor.
4
EXHIBIT 99.1
================================================================================
[GRAPHIC OMITTED]
OCWEN ASSET INVESTMENT CORP.
================================================================================
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION, CONTACT:
A. RICHARD HURWITZ
VP, CORPORATE COMMUNICATIONS
T: (561) 682-8575
F: (561) 682-8177 OR E-MAIL: [email protected]
------------------
OCWEN ASSET INVESTMENT CORP. REPORTS FIRST QUARTER 1999 RESULTS
West Palm Beach, FL - (May 7, 1999) Ocwen Asset Investment Corp. (NYSE: OAC)
reported 1999 first quarter Funds From Operations ("FFO") of $(0.4) million, or
$(0.02) per diluted share, compared to a gain of $3.8 million, or $0.20 per
diluted share, for the same period a year ago. Excluding losses on securities
available for sale, 1999 first quarter FFO was $7.1 million, or $0.38 per
diluted share, compared to $6.6 million, or $0.35 per diluted share, for the
same period a year ago.
LOSSES ON SECURITIES AVAILABLE FOR SALE
OAC incurred net losses of $7.5 million on its securities available for sale
portfolio which were comprised of an $8.3 million writedown of its residential
subprime and residual mortgage-backed securities, reflecting continuing market
illiquidity for these instruments, offset by a $0.8 million gain on the sale of
commercial subordinate mortgage-backed securities. For the quarter ended March
31, 1998, net losses on securities available for sale were $17.1 million.
SELECTED OPERATING RESULTS
(Dollars in millions, except per share data)
Three Months Ended Three Months Ended
March 31, 1999 March 31, 1998
--------------------- -----------------------
Reported Amount Per share Amount Per share
- --------------- ------- --------- -------- ---------
Net loss ...... $ (0.8) $ (0.04) $ (10.5) $ (0.55)
FFO ........... $ (0.4) $ (0.02) $ 3.8 $ 0.20
Adjusted*
- ---------------
Net income..... $ 6.8 $ 0.36 $ 6.3 $ 0.33
FFO ........... $ 7.1 $ 0.38 $ 6.6 $ 0.35
* Excludes writedowns of securities available for sale.
5
<PAGE>
Ocwen Asset Investment Corp.
1999 First Quarter Results
SELECTED OPERATING RESULTS: Three Months Ended March 31,
------------------------------
Dollars in thousands, except per share data 1999 1998
- ------------------------------------------- ------------ ------------
Net interest income .................... $ 9,454 $ 6,779
Real estate income, net ................ 179 804
Expenses ............................... (2,857) (1,094)
Losses on securities ................... (7,456) (17,077)
Minority interest in net loss of
consolidated subsidiary .............. 154 190
Net loss ............................... (784) (10,504)
Funds from operations ..................... (441) 3,758
PER SHARE DATA:
Diluted loss per share ............... (0.04) (0.55)
Dividends ............................ -- 0.25
Diluted weighted average common shares
Outstanding ......................... 18,965,000 18,965,000
RECENT DEVELOPMENTS
PROPOSAL FOR POSSIBLE BUSINESS COMBINATION WITH OCWEN FINANCIAL CORPORATION
(NYSE: OCN)
On April 16, 1999, OAC announced the receipt of a proposal from Ocwen Financial
regarding a possible business combination between Ocwen Financial Corporation
(NYSE: OCN) and OAC. OAC has formed a Special Committee of its Board, consisting
of two independent directors; a third independent director, Mr. Benjamin
Navarro, resigned from the Board on April 26, 1999. The Special Committee
intends to consider the Ocwen Financial proposal as well OAC's other strategic
alternatives, including, but not limited to, recapitalization, restructuring,
and sale of the Company to another party. The Special Committee has engaged
PaineWebber Incorporated as its financial advisor. Since Ocwen Financial's
proposal would be subject to approval by the OAC shareholders, OAC has postponed
its 1999 Annual Meeting of the shareholders, originally scheduled for May 12,
1999.
AMOUNT OF DEFERRED FINAL 1998 DIVIDEND
On December 21, 1998, OAC announced that its Board of Directors had deferred
payment of OAC's final 1998 dividend. The amount of the deferred dividend is
$15.5 million or $0.82 per share. The Company expects to pay this dividend in
1999, although there can be no assurance as to whether or when that dividend
will be paid.
NO QUARTERLY INVESTOR CONFERENCE CALL
In light of the receipt of a proposal from Ocwen Financial regarding a possible
business combination between OAC and Ocwen Financial, OAC will not have its
normally scheduled quarterly investor conference call following the release of
its first quarter earnings.
SELECTED REVIEW OF LIQUIDITY POSITION
At March 31, 1999, the Company had cash and cash equivalents of $61.2 million
and a debt to equity ratio of 2.7 to 1, compared to cash and cash equivalents of
$53.4 million and a debt to equity ratio of 2.9 to 1 at December 31, 1998. At
March 31, 1999, OAC's book value per share was $11.62, compared to $11.66 at
December 31, 1998 and $14.30 at December 31, 1997. At March 31, 1999, the equity
of the Company's operating partnership exceeded the net worth covenant
associated with each of the Company's debt agreements.
6
<PAGE>
Ocwen Asset Investment Corp.
1999 First Quarter Results
SELECTED FUNDING REQUIREMENTS THROUGH MARCH 31, 2000:
(Dollars in millions)
Maturing repurchase agreements ................. $ 91.5
Construction/renovation funding commitments .... 53.7
Less available lines of credit ...... (20.9) 32.8
------ -------
Total funding requirements ..................... 124.3
Less cash and cash equivalents ...... (61.2)
-------
Funding deficit ................................ $ 63.1
=======
In addition, and as discussed above, the amount of OAC's deferred final 1998
dividend is $15.5 million. The Company is continuing to pursue several
strategies to improve liquidity, including seeking alternate sources of
financing. At present, management believes that the Company will be able to
satisfy funding requirements for the foreseeable future either from existing,
replacement, or new funding sources, as permitted by the Indenture (as defined
below). There can be no assurance, however, that this will be the case.
DEBT LIMITATIONS
The indenture under which the Company's 11.5% Redeemable Notes due 2005 were
issued (the "Indenture") prohibits the Company from incurring or issuing debt,
other than certain permitted indebtedness ("Permitted Indebtedness"), unless
certain financial tests are satisfied. One such test requires that the ratio of
adjusted FFO to adjusted fixed charges for the previous four fiscal quarters
exceeds 1.25 to 1. While this test is not currently satisfied and the Company
does not expect this financial test to be satisfied during 1999, it believes
that it can meet its financing needs from sources of Permitted Indebtedness,
which includes certain new debt, as well as renewals or refinancings of existing
debt structured to meet certain conditions. There can be no assurance, however,
that this will be the case.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase were $114.0 million at March 31,
1999, compared to $138.6 million at December 31, 1998. These obligations were
secured by certain of OAC's investments in subordinated interests in commercial
mortgage-backed securities, residual interests in subprime residential loan
securitizations, and U.K. mortgage loan residual securities. The following table
summarizes the maturity dates of OAC's securities sold under agreements to
repurchase and the fair value of the related collateral securities as of March
31, 1999:
(Dollars in millions) Fair Value of Collateral
------------------------------
Outstanding Commercial Residential
Maturity Date Borrowing Securities Securities
- ----------------------- ----------- ------------ -----------
Within 1 month .............. $ 46.9 $ 76.2 $ 11.3
2 - 5 months ................ 26.8 -- 37.9
6 - 12 months ............... 17.8 15.6 33.2
More than 1 year ............ 22.5 -- 96.8
----------- ----------- -----------
Total........................ $ 114.0 $ 91.8 $ 179.2
=========== ============ ===========
Currently, interest payments with respect to these obligations are approximately
$0.9 million per month (which assumes that the repurchase agreements, which
mature within 30 days, are renewed at approximately the same rate of interest).
OBLIGATIONS OUTSTANDING UNDER LINES OF CREDIT
Obligations outstanding under lines of credit amounted to $41.0 million at March
31, 1999, compared to $34.5 million at December 31, 1998. These obligations were
incurred pursuant to a three-year agreement, which is collateralized by
commercial loans and is described below in footnote 2 under "OBLIGATIONS
OUTSTANDING UNDER LINES OF CREDIT - REAL ESTATE."
7
<PAGE>
Ocwen Asset Investment Corp.
1999 First Quarter Results
OBLIGATIONS OUTSTANDING UNDER LINES OF CREDIT - REAL ESTATE
Obligations outstanding under lines of credit secured by real estate amounted to
$143.8 million at March 31, 1999, compared to $142.6 million at December 31,
1998. These borrowings have a three-year term and an interest rate that floats
with LIBOR. Set forth below is information regarding OAC's mortgage indebtedness
relating to its investment in real estate at March 31, 1999:
<TABLE>
<CAPTION>
(Dollars in millions) Principal Interest Maturity Annual
Property Amount Rate Date Payment
- ------------------------------------------ ---------------- -------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Bush Street Property...................... $75.0 (1) LIBOR plus 1.75% April 2001(3) $5.0 (4)
Other..................................... $68.8 (2) LIBOR plus 1.75% June 2001(3) $4.5 (4)
</TABLE>
1) Plus up to $5.0 million of additional advances for capital improvements to
the Bush Street Property.
2) Represents the portion of the outstanding balance that is secured by real
estate under a $200 million line of credit. As of March 31, 1999, OAC's
investments in Cortez Plaza, 450 Sansome Street, 10 U.N. Plaza, Prudential
Plaza, and 690 Market Street secured this loan, and an additional $41.0
million was borrowed and secured by commercial mortgage loans totaling
$109.8 million.
3) Subject to certain conditions, OAC may extend the maturity date by one
year.
4) Annual interest payment based on the interest rate in effect as of March
31, 1999.
SELECTED REVIEW OF OPERATING RESULTS
NET INTEREST INCOME
Net interest income before provision for loan losses increased $2.7 million to
$9.5 million during the first quarter of 1999, compared to the same period a
year ago. The net interest income increase was due to a $329.7 million increase
in the average balances of interest-earning assets, combined with a shift in the
mix of higher yielding interest earning assets. Specifically, these increases
resulted in an $11.9 million increase in interest income, which was offset in
part by a $9.2 million increase in interest expense due to larger borrowings to
fund these assets and an increase in the average cost of funds. The net interest
spread increased 3 basis points from 4.09% in the first quarter of 1998 to 4.12%
in the first quarter of 1999.
The following table sets forth information regarding the total amount of income
from interest-earning assets and the resultant average yields, prior to
impairment charges. This information is based on daily average balances during
the reported periods.
<TABLE>
<CAPTION>
For the Three Months ended March 31,
------------------------------------------------------------------
(Dollars in thousands) 1999 1998
-------------------------------- ---------------------------------
Average Annualized Average Annualized
Balance Interest Yield/Rates Balance Interest Yield/Rates
-------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Repurchase agreements and interest-bearing deposits.. $ 38,728 $ 495 5.11% $ 14,446 $ 198 5.48%
Securities held for trading ......................... -- -- -- 62,586 482 3.08
Securities available for sale ....................... 321,281 13,638 16.98 125,241 4,649 14.85
Commercial and multifamily loan portfolio ........... 68,590 1,649 9.62 25,109 806 12.84
Match funded residential loans ...................... 164,795 3,327 8.08 -- -- --
Residential loan portfolio .......................... 7,370 145 7.87 22,396 435 7.77
Discount loans ...................................... 5,618 126 8.97 26,921 903 13.42
------------------------------ ------------------------------
Total interest-earning assets .................... $606,382 $ 19,380 12.78% $276,699 $ 7,473 10.80%
------------------------------ ------------------------------
Interest-bearing liabilities:
Securities sold under agreements to repurchase ...... 126,363 2,642 8.36% 39,577 665 6.72%
Obligations outstanding under lines of credit ....... 34,618 607 7.01 1,820 29 6.37
11.5% Redeemable Notes due 2005 ..................... 143,000 4,154 11.62 -- -- --
Bonds-match funded loan agreement ................... 154,380 2,523 6.54 -- -- --
------------------------------ ------------------------------
Total interest-bearing liabilities ............... $458,361 $ 9,926 8.66% $ 41,397 $ 694 6.71%
------------------------------ ------------------------------
Net interest income/net interest spread................... $ 9,454 4.12% $ 6,779 4.09%
======== ========
Net interest margin....................................... 6.24% 9.80%
</TABLE>
8
<PAGE>
Ocwen Asset Investment Corp.
1999 First Quarter Results
REAL ESTATE INCOME, NET
Real estate income, net decreased $0.6 million to $0.2 million for the three
months ended March 31, 1999, compared to the same period a year ago. This
decrease reflects a $5.9 million increase in rental income, offset by a $3.0
million increase in rental operation expense, a $0.9 million increase in
depreciation and amortization expense, and a $2.7 million increase in interest
expense. These increases in real estate operating income and expenses, compared
to the same period a year ago, were largely the result of an increase in OAC's
investment in real estate, net to $208.7 million at March 31, 1999, compared to
$58.9 million at March 31, 1998.
OTHER EXPENSES
Other expenses increased $1.8 million to $2.9 million for the three months ended
March 31, 1999, compared to the same period a year ago. This increase was
largely due to a $0.7 million increase in management fees, resulting from an
increased asset base, and a $1.0 million increase in servicing, accounting,
audit, legal, excise tax, and bond amortization expenses. The management fees
payable by OAC to Ocwen Capital Corporation ("OCC"), a wholly-owned subsidiary
of Ocwen Financial, totaled $1.5 million for the quarter ended March 31, 1999.
LOSSES ON SECURITIES AVAILABLE FOR SALE
OAC incurred net losses of $7.5 million on its securities available for sale
portfolio which were comprised of an $8.3 million writedown of its residential
subprime and residual mortgage-backed securities, reflecting continuing market
illiquidity for these instruments, offset by a $0.8 million gain on the sale of
commercial subordinate mortgage-backed securities. For the quarter ended March
31, 1998, net losses on securities available for sale were $17.1 million.
The losses on the securities available for sale portfolio, during the first
quarter of 1999, were taken against residential subprime bonds, reflecting
continuing market illiquidity for these instruments. Additionally, one of these
bonds had stopped cash flowing, which resulted in a decline in its fair value.
The Company prices its securities portfolio at fair value each month based on
broker/dealer marks, subject to an internal review process.
SELECTED REVIEW OF SECURITIES PORTFOLIO
At March 31, 1999, OAC's securities available for sale portfolio was $316.2
million and consisted of:
o Non-investment grade and unrated subordinate commercial mortgage-backed
securities having an amortized cost of $103.7 million and a fair value of
$104.7 million,
o Unrated residential subprime residuals having an amortized cost of $187.1
million and a fair value of $197.2 million, and
o Unrated subordinate residential mortgage-backed securities having an
amortized cost of $14.6 million and a fair value of $14.3 million.
At March 31, 1999, OAC's unrated subprime residual portfolio of $197.2 million
consisted of:
o $97.8 million of seasoned residuals (securitized between 1994 and 1997)
with overcollateralization reserves funded at approximately $140.2
million, and
o $99.4 million of unseasoned residuals (securitized in 1998) with
overcollateralization reserves funded at approximately $28.5 million.
At December 31, 1998, OAC's securities available for sale portfolio was $351.2
million and consisted of:
o Non-investment grade and unrated subordinate commercial mortgage-backed
securities having an amortized cost of $115.7 million and a fair value of
$117.1 million,
o Unrated residential subprime residuals having an amortized cost of $209.0
million and a fair value of $218.7 million, and
o Unrated subordinate residential mortgage-backed securities having an
amortized cost of $15.4 million and a fair value of $15.4 million.
9
<PAGE>
Ocwen Asset Investment Corp.
1999 First Quarter Results
At December 31, 1998, OAC's unrated subprime residual portfolio of $218.7
million consisted of:
o $110.0 million of seasoned residuals (securitized between 1994 and 1997)
with overcollateralization reserves funded at approximately $122.5
million, and
o $108.7 million of unseasoned residuals (securitized in 1998) with
overcollateralization reserves funded at approximately $26.6 million.
OTHER
Ocwen Asset Investment Corp., a real estate investment trust headquartered in
West Palm Beach, Florida, has invested in underperforming commercial real
estate, subordinate commercial mortgage-backed securities, subordinate and
residual residential mortgage-backed securities, and commercial and residential
mortgage loans. Additional information about Ocwen Asset Investment Corp.
is available at www.ocwen.com - OAC.
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 EXCHANGE 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 "BELIEVE,"
"COMMITMENT," "CONTINUE," "EXPECT," "FORESEE," "MAY," "PLAN," "WILL," 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, 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, PREVAILING INTEREST
OR CURRENCY EXCHANGE RATES, EFFECTIVENESS OF INTEREST RATE, CURRENCY EXCHANGE
RATE AND OTHER HEDGING STRATEGIES, LAWS AND REGULATIONS AFFECTING REAL ESTATE
INVESTMENT TRUSTS, INVESTMENT COMPANIES AND REAL ESTATE (INCLUDING CAPITAL
REQUIREMENTS, INCOME AND PROPERTY TAXATION, ACCESS FOR DISABLED PERSONS AND
ENVIRONMENTAL COMPLIANCE), UNCERTAINTY OF FOREIGN LAWS, COMPETITIVE PRODUCTS,
PRICING AND CONDITIONS (INCLUDING FROM COMPETITORS THAT HAVE SIGNIFICANTLY
GREATER RESOURCES THAN OAC), CREDIT, PREPAYMENT, BASIS, DEFAULT, SUBORDINATION
AND ASSET/LIABILITY RISKS, LOAN SERVICING EFFECTIVENESS, SATISFACTORY DUE
DILIGENCE RESULTS, SATISFACTION OR FULFILLMENT OF AGREED UPON TERMS AND
CONDITIONS OF CLOSING OR PERFORMANCE, TIMING OF TRANSACTION CLOSINGS, THE
DECISION TO CURTAIL EACH BUSINESS LINE AND DISCONTINUE INVESTMENT ACTIVITIES,
AVAILABILITY OF AND COSTS ASSOCIATED WITH OBTAINING ADEQUATE AND TIMELY SOURCES
OF LIQUIDITY, DEPENDENCE ON EXISTING SOURCES OF FUNDING, ABILITY TO REPAY OR
REFINANCE INDEBTEDNESS (AT MATURITY OR UPON ACCELERATION), TO MEET COLLATERAL
CALLS BY LENDERS (UPON RE-VALUATION OF THE UNDERLYING ASSETS OR OTHERWISE), TO
GENERATE REVENUES SUFFICIENT TO MEET DEBT SERVICE PAYMENTS AND OTHER OPERATING
EXPENSES AND TO SECURITIZE WHOLE LOANS, TAXABLE INCOME EXCEEDING CASH FLOW, SIZE
OF, NATURE OF AND YIELDS AVAILABLE WITH RESPECT TO THE SECONDARY MARKET FOR
MORTGAGE LOANS AND FINANCIAL, SECURITIES AND SECURITIZATION MARKETS IN GENERAL,
ALLOWANCES FOR LOAN LOSSES, GEOGRAPHIC CONCENTRATIONS OF ASSETS (TEMPORARY OR
OTHERWISE), TIMELY LEASING OF UNOCCUPIED SQUARE FOOTAGE (GENERALLY AND UPON
LEASE EXPIRATION), CHANGES IN REAL ESTATE MARKET CONDITIONS (INCLUDING
LIQUIDITY, VALUATION, REVENUES, RENTAL RATES, OCCUPANCY LEVELS AND COMPETING
PROPERTIES), ADEQUACY OF INSURANCE COVERAGE IN THE EVENT OF A LOSS, KNOWN OR
UNKNOWN ENVIRONMENTAL CONDITIONS, EXTERNAL MANAGEMENT, CONFLICTS OF INTEREST,
YEAR 2000 COMPLIANCE, OTHER FACTORS GENERALLY UNDERSTOOD TO AFFECT THE REAL
ESTATE ACQUISITION, MORTGAGE AND LEASING MARKETS, SECURITIES INVESTMENTS AND
RAPID GROWTH COMPANIES, AND OTHER RISKS DETAILED FROM TIME TO TIME IN OAC'S
REPORTS AND FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"),
INCLUDING ITS REGISTRATION STATEMENTS ON FORMS S-3, S-4 AND S-11 AND ITS
PERIODIC REPORTS ON FORMS 10-Q, 8-K, AND 10-K. GIVEN THESE UNCERTAINTIES,
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH STATEMENTS, AND OAC
DOES NOT UNDERTAKE TO REVISE, AND SPECIFICALLY DISCLAIMS ANY OBLIGATION, TO
PUBLICLY RELEASE THE RESULT 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. PLEASE
REFER TO EXHIBIT 99.2 INCLUDED WITH THE FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1998 AND FILED WITH THE SEC, FOR A DESCRIPTION OF MATERIAL RISKS FACED BY
THE COMPANY AND ITS SECURITIES HOLDERS.
ATTACHED ARE THE CONSOLIDATED FINANCIAL STATEMENTS.
10
<PAGE>
Ocwen Asset Investment Corp.
1999 First Quarter Results
OCWEN ASSET INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- -------------
<S> <C> <C>
ASSETS
Cash and amounts due from depository institutions ...................... $ 3,641,241 $ 3,484,929
Interest-bearing deposits .............................................. 57,605,709 49,880,276
Securities available for sale, at fair value ........................... 316,198,972 351,153,971
Commercial and multi-family loan portfolio, net ........................ 70,339,922 65,282,965
Residential loan portfolio, net ........................................ 6,558,614 8,058,445
Match funded residential loans, net .................................... 154,164,052 173,609,873
Discount loan portfolio, net ........................................... 5,618,022 5,618,022
Investment in real estate, net ......................................... 208,733,751 208,058,721
Principal and interest receivable ...................................... 4,056,990 7,475,795
Other assets ........................................................... 15,850,394 15,702,816
------------- -------------
Total assets ....................................................... $ 842,767,667 $ 888,325,813
============= =============
LIABILITIES:
Securities sold under agreements to repurchase ......................... $ 113,991,304 $ 138,611,824
Obligations outstanding under lines of credit .......................... 41,015,023 34,472,404
Obligations outstanding under lines of credit - secured by real estate.. 143,755,698 142,556,880
11.5% Redeemable Notes due 2005 ....................................... 143,000,000 143,000,000
Bonds - match funded loan agreement ................................... 143,298,397 163,403,966
Accrued expenses, payables and other liabilities ....................... 13,665,050 21,190,288
------------- -------------
Total liabilities .................................................. 598,725,472 643,235,362
------------- -------------
Minority interest .......................................................... 23,759,807 23,914,058
------------- -------------
SHAREHOLDERS' 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 ........................... 189,650 189,650
Additional paid-in capital ............................................. 294,492,203 294,492,203
Cumulative dividends declared .......................................... (36,277,546) (36,277,546)
Retained deficit ....................................................... (47,178,264) (46,394,403)
Accumulative other comprehensive income:
Unrealized gain on securities available for sale ................... 10,797,797 11,038,151
Cumulative translation adjustment .................................. (1,741,452) (1,871,662)
------------- -------------
Total other comprehensive income ................................ 9,056,345 9,166,489
------------- -------------
Total shareholders' equity ...................................... 220,282,388 221,176,393
------------- -------------
$ 842,767,667 $ 888,325,813
============= =============
</TABLE>
11
<PAGE>
OCWEN ASSET INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
INTEREST INCOME:
Repurchase agreements and interest bearing deposits .... $ 494,604 $ 198,138
Securities held for trading............................. -- 482,192
Securities available for sale........................... 13,638,517 4,648,582
Commercial and Multifamily loans ....................... 1,648,514 805,786
Match funded residential loans.......................... 3,327,143 --
Residential loans....................................... 145,398 435,021
Discount loans ......................................... 126,318 902,777
----------- ------------
19,380,494 7,472,496
----------- ------------
INTEREST EXPENSE:
Securities sold under agreements to repurchase.......... 2,642,002 665,269
Obligations outstanding under lines of credit .......... 606,684 28,548
11.5% Redeemable Notes due 2005 ........................ 4,154,150 --
Bonds-match funded loan agreements..................... 2,523,602 --
----------- ------------
9,926,438 693,817
----------- ------------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES.... 9,454,056 6,778,679
Provision for loan losses............................... 257,852 105,073
----------- ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES..... 9,196,204 6,673,606
----------- ------------
REAL ESTATE-OPERATING INCOME:
Rental income........................................... 7,982,430 2,034,287
Other................................................... 10,382 7,857
----------- ------------
7,992,812 2,042,144
----------- ------------
REAL ESTATE-OPERATING EXPENSES:
Rental operation........................................ 3,962,709 933,746
Depreciation & amortization............................. 1,193,977 304,437
Interest................................................ 2,657,326 --
----------- ------------
7,814,012 1,238,183
----------- ------------
REAL ESTATE INCOME, NET.................................... 178,800 803,961
----------- ------------
OTHER EXPENSES:
Management fees......................................... 1,524,429 828,881
Due diligence expenses.................................. 122,745 192,689
Foreign currency loss................................... -- (116,953)
Other................................................... 1,210,309 189,655
----------- ------------
2,857,483 1,094,272
----------- ------------
LOSSES ON SECURITIES....................................... (7,455,633) (17,077,079)
----------- ------------
LOSS BEFORE MINORITY INTEREST.............................. (938,112) (10,693,784)
Minority interest in net loss of consolidated subsidiary... 154,251 189,542
----------- ------------
NET LOSS ............................................ $ (783,861) $(10,504,242)
=========== ============
LOSS PER SHARE:
Basic................................................... $ (0.04) $ (0.55)
=========== ============
Diluted................................................. $ (0.04) $ (0.55)
=========== ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic................................................... 18,965,000 18,965,000
=========== ============
Diluted................................................. 18,965,000 18,965,000
=========== ============
</TABLE>
12
EXHIBIT 99.2
================================================================================
[GRAPHIC LOGO OF OCWEN OMITTED]
OCWEN ASSET INVESTMENT CORP.
================================================================================
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION, CONTACT:
A. RICHARD HURWITZ
VP, CORPORATE COMMUNICATIONS
T: (561) 682-8575
F: (561) 682-8177 OR
E-MAIL: [email protected]
------------------
OCWEN ASSET INVESTMENT CORP.'S
SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS
ENGAGES PAINEWEBBER TO ACT AS FINANCIAL ADVISOR
West Palm Beach, FL - (May 7, 1999) Ocwen Asset Investment Corp. (NYSE: OAC)
announced today that its Special Committee of Independent Directors has engaged
PaineWebber Incorporated as its financial advisor in connection with the
proposal for possible business combination with Ocwen Financial Corporation
(NYSE: OCN).
On April 16, 1999, OAC announced the receipt of a proposal from Ocwen Financial
regarding a possible business combination between Ocwen Financial Corporation
(NYSE: OCN) and OAC. OAC has formed a Special Committee of its Board, consisting
of two independent directors; a third independent director, Mr. Benjamin
Navarro, resigned from the Board on April 26, 1999. The Special Committee
intends to consider the Ocwen Financial proposal as well OAC's other strategic
alternatives, including, but not limited to, recapitalization, restructuring,
and sale of the Company to another party. Since Ocwen Financial's proposal would
be subject to approval by the OAC shareholders, OAC has postponed its 1999
Annual Meeting of the shareholders, originally scheduled for May 12, 1999.
OTHER
Ocwen Asset Investment Corp., a real estate investment trust headquartered in
West Palm Beach, Florida, has invested in underperforming commercial real
estate, subordinate commercial mortgage-backed securities, subordinate and
residual residential mortgage-backed securities, and commercial and residential
mortgage loans. Additional information about Ocwen Asset Investment Corp. is
available at www.ocwen.com - OAC.
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 EXCHANGE 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 "BELIEVE,"
"COMMITMENT," "CONTINUE," "EXPECT," "FORESEE," "MAY," "PLAN," "WILL," 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, 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, PREVAILING INTEREST
OR CURRENCY EXCHANGE RATES, EFFECTIVENESS OF INTEREST RATE, CURRENCY EXCHANGE
RATE AND OTHER HEDGING STRATEGIES, LAWS AND REGULATIONS AFFECTING REAL ESTATE
INVESTMENT TRUSTS, INVESTMENT COMPANIES AND REAL ESTATE (INCLUDING CAPITAL
REQUIREMENTS, INCOME AND PROPERTY TAXATION, ACCESS FOR DISABLED PERSONS AND
ENVIRONMENTAL COMPLIANCE), UNCERTAINTY OF FOREIGN LAWS, COMPETITIVE PRODUCTS,
PRICING AND CONDITIONS (INCLUDING FROM COMPETITORS THAT HAVE SIGNIFICANTLY
GREATER RESOURCES THAN OAC), CREDIT, PREPAYMENT, BASIS, DEFAULT, SUBORDINATION
AND ASSET/LIABILITY RISKS, LOAN SERVICING EFFECTIVENESS, SATISFACTORY DUE
DILIGENCE RESULTS, SATISFACTION OR FULFILLMENT OF AGREED UPON TERMS AND
CONDITIONS OF CLOSING OR PERFORMANCE, TIMING OF TRANSACTION CLOSINGS, THE
DECISION TO CURTAIL EACH BUSINESS LINE AND DISCONTINUE INVESTMENT ACTIVITIES,
AVAILABILITY OF AND COSTS ASSOCIATED WITH OBTAINING
13
<PAGE>
ADEQUATE AND TIMELY SOURCES OF LIQUIDITY, DEPENDENCE ON EXISTING SOURCES OF
FUNDING, ABILITY TO REPAY OR REFINANCE INDEBTEDNESS (AT MATURITY OR UPON
ACCELERATION), TO MEET COLLATERAL CALLS BY LENDERS (UPON RE-VALUATION OF THE
UNDERLYING ASSETS OR OTHERWISE), TO GENERATE REVENUES SUFFICIENT TO MEET DEBT
SERVICE PAYMENTS AND OTHER OPERATING EXPENSES AND TO SECURITIZE WHOLE LOANS,
TAXABLE INCOME EXCEEDING CASH FLOW, SIZE OF, NATURE OF AND YIELDS AVAILABLE WITH
RESPECT TO THE SECONDARY MARKET FOR MORTGAGE LOANS AND FINANCIAL, SECURITIES AND
SECURITIZATION MARKETS IN GENERAL, ALLOWANCES FOR LOAN LOSSES, GEOGRAPHIC
CONCENTRATIONS OF ASSETS (TEMPORARY OR OTHERWISE), TIMELY LEASING OF UNOCCUPIED
SQUARE FOOTAGE (GENERALLY AND UPON LEASE EXPIRATION), CHANGES IN REAL ESTATE
MARKET CONDITIONS (INCLUDING LIQUIDITY, VALUATION, REVENUES, RENTAL RATES,
OCCUPANCY LEVELS AND COMPETING PROPERTIES), ADEQUACY OF INSURANCE COVERAGE IN
THE EVENT OF A LOSS, KNOWN OR UNKNOWN ENVIRONMENTAL CONDITIONS, EXTERNAL
MANAGEMENT, CONFLICTS OF INTEREST, YEAR 2000 COMPLIANCE, OTHER FACTORS GENERALLY
UNDERSTOOD TO AFFECT THE REAL ESTATE ACQUISITION, MORTGAGE AND LEASING MARKETS,
SECURITIES INVESTMENTS AND RAPID GROWTH COMPANIES, AND OTHER RISKS DETAILED FROM
TIME TO TIME IN OAC'S REPORTS AND FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"), INCLUDING ITS REGISTRATION STATEMENTS ON FORMS S-3, S-4
AND S-11 AND ITS PERIODIC REPORTS ON FORMS 10-Q, 8-K, AND 10-K. GIVEN THESE
UNCERTAINTIES, READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH
STATEMENTS, AND OAC DOES NOT UNDERTAKE TO REVISE, AND SPECIFICALLY DISCLAIMS ANY
OBLIGATION, TO PUBLICLY RELEASE THE RESULT 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. PLEASE
REFER TO EXHIBIT 99.2 INCLUDED WITH THE FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1998 AND FILED WITH THE SEC, FOR A DESCRIPTION OF MATERIAL RISKS FACED BY
THE COMPANY AND ITS SECURITIES HOLDERS.
14
