<PAGE>
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
November 3, 1998
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Date of Report (Date of earliest event reported)
Imperial Credit Commercial Mortgage Investment Corp.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Maryland 000-23089 95-4648345
- ---------------------------------- --------------------- -----------------------
State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
11601 Wilshire Blvd., Suite 2080, Los Angeles, CA 90025
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(Address of principal executive offices) (Zip Code)
(310) 231-1280
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(Registrant's telephone number)
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ITEM 5. OTHER EVENTS.
On November 3, 1998, Imperial Credit Commercial Mortgage Investment Corp.
(the Registrant") issued a press release (a) reporting its earnings for the
quarter ended September 30, 1998 and (b) announcing that the Company has been
notified that its warehouse line of credit with Morgan Guaranty Trust Company of
New York, which expires on March 29, 1999, will not be extended based on market
related factors rather than any concerns specific to the Company.
A copy of the press release is attached as Exhibit 99.1 to this Form 8-K
and is incorporated herein by reference.
ITEM 7. EXHIBIT
Exhibit 99.1 Press release of the Registrant, dated November 3, 1998
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
By: /s/ MICHAEL MELTZER
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Michael Meltzer, Chief Financial Officer and Treasurer
Dated: November 4, 1998
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
--- -----------
99.1 Press release of the Registrant dated November 3, 1998
<PAGE>
EXHIBIT 99.1
[LOGO OF IMPERIAL CREDIT COMMERCIAL
MORTGAGE INVESTMENT CORPORATION]
FOR IMMEDIATE RELEASE
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT
CORP. ANNOUNCES THIRD QUARTER 1998 RESULTS
LOS ANGELES, CALIFORNIA, November 3, 1998. Imperial Credit Commercial Mortgage
Investment Corp. (Nasdaq: ICMI) today reported net earnings of $2.2 million, or
$0.07 per share (on both a basic and diluted basis) for the quarter ended
September 30, 1998. Net earnings for the nine months ended September 30, 1998
were $19.2 million, or $0.57 per share (on both a basic and diluted basis). Net
earnings for the quarter and nine months ended September 30, 1998 are reported
after certain non-cash charges of $6.4 million ($0.20 per share) and $6.5
million ($0.19 per share), respectively. The non-cash charges were taken
primarily to write down the Company's commercial mortgage-backed interest-only
securities to estimated fair value based on current market conditions and
estimated prepayment speeds and to increase the allowance for loan losses on
mortgage loans to address increased delinquencies on a multifamily and
commercial loan portfolio previously acquired from an unaffiliated third party.
The Company's third quarter results and financial position are summarized
as follows (dollars in thousands, except per share data):
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<CAPTION>
Amounts Per Share
------------------
Operating Results: Amount Basic/(A)/ Diluted/(B)/
- ------------------ ------- ---------- ------------
<S> <C> <C> <C>
Net earnings $2,178 $0.07 $0.07
Funds from operations $2,898 $0.09 $0.09
Dividends /(C)/ $9,603 $0.33 n/a
Summary of Financial Position:
- -----------------------------
Cash and cash equivalents $ 16,680
Securities available-for-sale 60,074
Mortgage loans, net 579,920
Real property, net 108,271
Other assets 11,626
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Total Assets $776,571
========
Liabilities other than debt $ 16,955
Debt 339,702
Total Stockholders' Equity 419,914
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Total Liabilities and Stockholders' Equity $776,571
========
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Per share amounts are based on /(A)/ basic weighted average common shares
outstanding and /(B)/ diluted weighted average common shares outstanding,
including common stock equivalents. In September, the Company declared a
dividend /(C)/ for the third quarter, which was paid on October 14, 1998.
The addition to the Company's allowance for loan losses during the third
quarter of $3.2 million was due to an increase in mortgage loans over 90 days
delinquent as well as the increased size of the Company's mortgage loan
portfolio. As of December 31, 1997, the Company's entire mortgage loan
portfolio included 872 loans with a principal balance of $261.4 million (before
an allowance for loan losses of $1.7 million), of which one loan with a
principal balance of $0.1 million was more than 90 days delinquent. As of
September 30, 1998, the Company's entire mortgage loan portfolio included 1,388
loans with a principal balance of $572.0 million (before an allowance for loan
losses of $5.0 million), of which 29 loans with a principal balance of $5.0
million were more than 90 days delinquent. The allowance for loan losses
represented 0.88% and 0.66% of the total principal balance of the Company's
mortgage loans at September 30, 1998 and December 31, 1997, respectively. The
primary increase in mortgage loans over 90 days delinquent comes from a loan
portfolio previously acquired from an unaffiliated third party. At September
30, 1998, this portfolio consisted of 295 loans with a principal balance of
$46.3 million, of which 24 loans with a principal balance of $4.1 million were
more than 90 days delinquent.
Annualized unleveraged asset yields for the third quarter were 8.81% for
mortgage loans (net of servicing fees), 9.64% for real property, 10.73% for
securities available-for-sale and 4.74% for interest bearing deposits. The
overall annualized yield on the Company's investments for the quarter was 9.03%.
During the third quarter, the Company acquired $100 million of additional
investments in a number of transactions. These investments consisted of $23
million of real property and $77 million of funded mortgage loans, including $22
million in mortgage loans acquired from Franchise Mortgage Acceptance Corp.
(Nasdaq: FMAX), an affiliate of the manager of the Company. The Company also
funded $55 million of mortgage loans to unaffiliated third parties.
During the third quarter, the Board of Directors of the Company authorized
the Company to repurchase up to 12 million shares of its common stock. As of
September 30, 1998, the Company had repurchased 5.4 million shares at a total
cost of $51.9 million. The Company repurchased an additional 600,000 shares
after the end of the third quarter, bringing the total number of repurchased
shares to 6 million at a total cost of $56.3 million, an average cost per
repurchased share of $9.39.
During the third quarter, the Company incurred $138 million of additional
debt in connection with its investments and stock repurchases, consisting of
$124 million under its existing lines of credit and a $14 million mortgage loan
secured by real property. The weighted average borrowing cost on the Company's
total outstanding debt during the third quarter was 6.78%, which included an
average cost on the Company's warehouse line of credit of 6.74% and a weighted
average cost of 6.79% on the first mortgage loans secured by the Company's real
property.
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As of September 30, 1998, the Company had a net worth of $420 million
($14.43 per share), total outstanding debt of $340 million and a debt to equity
ratio of 0.81 to 1. The Company currently has $25 million of availability on
its warehouse line of credit for additional investments, and over $230 million
of unleveraged assets. The Company's warehouse line of credit with Morgan
Guaranty Trust Company of New York expires on March 29, 1999, and the Company
has been notified that the line will not be extended based on market related
factors rather than any concerns specific to the Company.
Mark S. Karlan, President and CEO of the Company, said, "In light of
current market conditions and dislocations in the capital markets, we are
presently focusing our efforts on enhancing the Company's overall liquidity, on
maintaining leverage at prudent levels and on successfully closing the Company's
upcoming securitization of a substantial part of its mortgage loan portfolio.
This securitization should allow us to repay our outstanding debt on our
existing warehouse line of credit with Morgan Guaranty Trust Company of New
York. We believe that our financial resources are currently adequate for our
anticipated liquidity needs, including the quarterly payment of dividends."
Mr. Karlan added, "We have positioned our balance sheet well to withstand
significant market volatility. In particular, the Company has relatively little
exposure to the substantial mark-to-market devaluations recently imposed on
commercial mortgage-backed securities because the Company chose not to acquire
any additional CMBS assets subsequent to the time of its initial public offering
more than a year ago. CMBS and other securities available-for-sale comprise
less than 8% of the Company's total assets. In addition, the Company has a
relatively low level of leverage on its balance sheet, reducing the Company's
exposure to current market volatility."
Set forth below are the Company's consolidated balance sheets as of
September 30, 1998 and December 31, 1997 and consolidated statements of earnings
for the three and nine months ended September 30, 1998. Amounts are expressed
in thousands, except for share data.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
Consolidated Balance Sheets
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<CAPTION>
9/30/98 12/31/97
ASSETS --------- ----------
<S> <C> <C>
Cash and interest bearing deposits $ 16,680 $ 11,902
Repurchase agreements 0 148,711
Securities available-for-sale, at estimated fair value 60,074 59,321
Mortgage loans, net of loan loss allowance of $5,027 at 9/98 579,920 272,009
Accrued interest receivable 5,974 2,085
Real property, net 108,271 0
Other assets 5,652 1,109
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TOTAL ASSETS $776,571 $ 495,137
======== =========
LIABILITIES
Dividends and distributions payable $ 9,603 $ 4,485
Accrued expenses, payables and other liabilities 7,352 10,950
Borrowings under repurchase facility 12,400 0
Borrowings under secured warehouse facility 275,000 0
Borrowings under secured bank loan 3,573 0
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<S> <C> <C>
Mortgage loans secured by real property 48,729 0
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Total Liabilities 356,657 15,435
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STOCKHOLDERS' EQUITY
Common stock, $.0001 par value,
Authorized 500,000,000 shares,
34,500,000 shares issued 3 3
Additional paid-in capital 481,856 481,856
Accumulated other comprehensive income 616 169
Distributions in excess of earnings (10,665) (2,326)
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Total 471,810 479,702
Less cost of 5,400,000 shares in treasury (51,896) 0
-------- --------
Total Stockholders' Equity 419,914 479,702
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $776,571 $495,137
======== ========
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IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
Consolidated Statements of Earnings
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED 9/30/98 ENDED 9/30/98
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<S> <C> <C>
INTEREST INCOME
Mortgage loans $12,223 $28,354
Repurchase agreements and interest bearing deposits 98 2,284
Securities available-for-sale 1,566 4,631
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Total Interest Income 13,887 35,269
REAL PROPERTY RENTAL INCOME 3,274 4,266
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Total Income 17,161 39,535
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OPERATING EXPENSES
Management fees 1,818 4,383
Interest expense 4,441 5,475
Provision for loan losses 3,200 3,300
Write-down of securities available-for-sale 3,233 3,233
Depreciation of real property 720 962
Real property operating expenses 800 1,014
Due diligence expenses 343 866
Other 428 1,098
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Total Expenses 14,983 20,331
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NET EARNINGS $ 2,178 $19,204
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EARNINGS PER SHARE
Basic $ 0.07 $ 0.57
Diluted $ 0.07 $ 0.57
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 32,703,188 33,901,063
Diluted 32,703,188 33,924,452
</TABLE>
Imperial Credit Commercial Mortgage Investment Corp. is a real estate
investment trust that invests primarily in performing multifamily and commercial
mortgage loans, real property and commercial mortgage-backed securities. The
Company is managed by Imperial Credit Commercial Asset Management Corp., a
wholly-owned subsidiary of Imperial Credit Industries, Inc. (Nasdaq: ICII).
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Certain statements contained herein are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995, 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 "may," "will," "intend," "should," "expect," "anticipate," "estimate" or
"continue" or the negatives thereof or other comparable terminology. The
Company's actual results could differ materially from those anticipated in such
forward-looking statements due to a variety of factors, including, but not
limited to, changes in national, regional or local economic environments,
competitive products and pricing, government fiscal and monetary policies,
changes in prevailing interest rates, the course of negotiations, the
fulfillment of contractual conditions, factors inherent to the valuation and
pricing of interests in commercial mortgage-backed securities, other factors
generally understood to affect the real estate acquisition, mortgage and leasing
markets and security investments, the other risks detailed in the Company's
Registration Statement on Form S-11, as amended, filed with the Securities and
Exchange Commission (the "SEC"), the Company's 1997 Annual Report on Form 10-K
filed with the SEC on March 31, 1998, the Company's Quarterly Reports on Form
10-Q filed with the SEC on May 15, 1998 and August 14, 1998 and other filings
made by the Company with the SEC.
The Company will hold a teleconference on Tuesday, November 3, 1998 at
11:00 A.M. Pacific Time, 2:00 P.M. Eastern Time. The phone number for the
teleconference is (719) 457-0700 and confirmation code is 562684. To access a
replay of the teleconference, please call (719) 457-0820 on or before November
5, 1998.
For further information, please contact Michael Meltzer, Chief Financial
Officer, at (310) 231-5906 or Karen Montandon, Investor Relations, at (310) 791-
8022.
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