<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
February 4, 1999
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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)
Maryland 000-23089 95-4648345
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State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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 February 4, 1999, Imperial Credit Commercial Mortgage Investment Corp.
(the "Registrant") issued a press release reporting its earnings for the quarter
and year ended December 31, 1998.
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 February 4, 1999
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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: February 11, 1999
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<C> <S>
99.1 Press release of the Registrant dated February 4, 1999
</TABLE>
<PAGE>
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ICCMIC
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FOR IMMEDIATE RELEASE Exhibit 99.1
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP. ANNOUNCES FOURTH QUARTER
1998 RESULTS
LOS ANGELES, CALIFORNIA, February 4, 1999. Imperial Credit Commercial
Mortgage Investment Corp. (Nasdaq: ICMI) today reported net earnings of $3.0
million or $0.11 per share for the quarter ended December 31, 1998 as compared
to net earnings of $2.2 million or $0.06 per share for the 1997 short period.
The 1997 short period covers the period from July 31, 1997 (inception) through
December 31, 1997 although the Company commenced operations on October 22, 1997,
the date of completion of its initial public offering. Per share amounts
presented herein are the same for basic and diluted share computations. The
Company's net earnings for the quarter ended December 31, 1998 were reduced by
$4.3 million ($0.15 per share) for non-cash charges to write down certain of the
Company's commercial mortgage-backed securities to estimated fair value and to
increase the Company's allowance for loan losses on mortgage loans. Net
earnings for the 1997 short period included $2.6 million ($0.07 per share) of
non-cash charges for stock options issued to the Company's manager.
Net earnings for the year ended December 31, 1998 were $22.2 million or
$0.68 per share. Non-cash charges to write down certain of the Company's
commercial mortgage-backed securities to estimated fair value and to increase
the Company's allowance for loan losses on mortgage loans aggregated $10.9
million ($0.33 per share) for the year ended December 31, 1998. These charges
were taken primarily to write down the Company's commercial mortgage-backed
interest-only securities to estimated fair value based on market conditions and
estimated prepayment speeds and to increase the allowance for loan losses on
mortgage loans resulting from increased delinquencies on a multifamily and
commercial loan portfolio previously acquired from an unaffiliated third party.
The Company's operating results, funds from operations and financial
position are summarized as follows (dollars in thousands, except per share
data):
<TABLE>
<CAPTION>
1998 1998 1997
Operating Results: Year 4th Quarter Short Period
- ------------------ ---- ----------- ------------
<S> <C> <C> <C>
Net earnings $22,244 $3,040 $2,159
Depreciation of real property 1,755 793 -
Stock options expense 97 97 2,550
------- ------ ------
Funds from operations ("FFO") $24,096 $3,930 $4,709
======= ====== ======
Dividends declared 36,948 9,405 4,485
Net earnings per share 0.68 0.11 0.06
FFO per share 0.74 0.14 0.14
Dividends declared per share 1.18 0.33 0.13
</TABLE>
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<TABLE>
<CAPTION>
Summary of Financial Position (December 31): 1998 1997
- -------------------------------------------- ---- ----
<S> <C> <C>
Cash and cash equivalents $ 23,398 $ 11,902
Repurchase agreements - 148,711
Mortgage loans, net 556,648 272,009
Real property, net 107,663 -
Securities available-for-sale 57,671 59,321
Other assets 11,794 3,194
-------- --------
Total Assets $757,174 $495,137
======== ========
Dividends and other payables and accruals $ 17,233 $ 15,435
Debt 331,132 -
Total Stockholders' Equity 408,809 479,702
-------- --------
Total Liabilities and Stockholders' Equity $757,174 $495,137
======== ========
</TABLE>
Allowance for Loan Losses
The Company's provisions for loan losses during the fourth quarter and year
ended December 31, 1998 amounted to $3.0 million and $6.3 million, respectively,
as compared to none during the 1997 short period. The loan loss provisions were
generally due to an increase in mortgage loans over 90 days past due as well as
an increase in general reserves for the increased size of the Company's mortgage
loan portfolio. As of December 31, 1997, the Company's 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 over 90 days past due. As of December 31, 1998, the
Company's mortgage loan portfolio included 1,340 loans with a principal balance
of $552.9 million (before an allowance for loan losses of $8.0 million), of
which 40 loans with a principal balance of $5.8 million were over 90 days past
due and were maintained on non-accrual status. The ratio of the allowance for
loan losses to non-accrual loans was 1.38 to 1 at December 31, 1998. The
allowance for loan losses represented 1.45% and 0.66% of the total principal
balance of the Company's mortgage loans at December 31, 1998 and December 31,
1997, respectively. The primary increase in mortgage loans over 90 days past
due comes from a loan portfolio previously acquired from an unaffiliated third
party. At December 31, 1998, this portfolio consisted of 283 loans with a
principal balance of $44.9 million, of which 33 loans with a principal balance
of $4.9 million were over 90 days past due.
Securities Write-downs
The Company's write-downs of securities available-for-sale during the
fourth quarter and year ended December 31, 1998 amounted to $1.3 million and
$4.6 million, respectively, as compared to none during the 1997 short period.
These write-downs to estimated fair value were applicable to interest-only
commercial mortgage-backed securities that the Company acquired at the time of
its initial public offering. As of December 31, 1998, the Company
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held $7.6 million in interest-only commercial mortgage-backed securities (after
mark-to-market adjustments). Adverse market conditions and increased prepayment
speeds were the cause of the write-downs. Increases in prepayment speeds
generally cause permanent impairment of interest-only securities, resulting in
charges directly to earnings.
Net Interest Income
The table presented below sets forth the components of the Company's net
interest income (in thousands of dollars) and yields (expressed as a percentage
per annum) for the relevant periods. The yield computations are based on
average investment balances for interest income and average debt outstanding for
interest expense.
<TABLE>
<CAPTION>
1998 Year 1998 4th Quarter 1997 Short Period
------------------ ------------------ ------------------
Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Mortgage loans $41,130 8.71% $12,776 8.84% $1,676 7.86%
Securities 6,153 10.68 1,522 10.56 1,403 13.24
Interest bearing accounts* 2,454 5.39 170 4.38 3,388 5.53
------- ------- ------
Total Interest Income 49,737 8.64 14,468 8.88 6,467 6.94
Less interest expense** 9,255 6.83 4,793 6.68 - -
------- ------- ------
Net Interest Income $40,482 $ 9,675 $6,467
======= ======= ======
</TABLE>
* Includes repurchase agreements.
** Excludes interest expense attributable to real property.
Real Property
The table presented below sets forth the Company's real property operating
results (in thousands of dollars) and yields (expressed as a percentage per
annum) for the relevant periods (the Company held no real property in 1997).
The yields are based on the average amount of real property assets for rental
income after operating expenses and average debt outstanding for interest
expense.
<TABLE>
<CAPTION>
1998 Year 1998 4th Quarter
------------------- -------------------
Amount Yield Amount Yield
------ ----- ------ -----
<S> <C> <C> <C> <C>
Real Property Income:
Rental income $7,684 $3,418
Less operating expenses 1,872 858
------ ------
Rental income after operating expenses 5,812 9.61% 2,560 9.37%
Less interest expense 1,910 6.92 897 6.87
------ ------
Real property FFO 3,902 1,663
Less depreciation 1,755 793
------ ------
Real property income $2,147 $ 870
====== ======
</TABLE>
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Stock Repurchases
During the fourth quarter, the Company repurchased 600,000 shares of its
common stock for $4.4 million. This brought the total number of shares
repurchased in 1998 to six million at a total cost of $56.3 million, an average
cost per repurchased share of $9.39. The Company has been authorized by its
Board of Directors to repurchase up to an additional six million shares.
As of December 31, 1998, the Company had stockholders' equity of $408.8
million ($14.34 per share), total outstanding debt of $331.1 million and a debt
to equity ratio of 0.81 to 1. The Company's warehouse line of credit with
Morgan Guaranty Trust Company of New York expires on March 29, 1999. The
Company recently executed a term sheet with a major investment bank for a $300
million warehouse line of credit, subject to completion of due diligence and
loan documentation. The Company is presently working on a collateralized
mortgage obligation securitization that is planned for the first quarter of
1999.
Mark S. Karlan, President and CEO of the Company, said, "We are focusing
our efforts on successfully closing the Company's upcoming securitization of a
substantial part of its mortgage loan portfolio. The securitization should
allow the Company to repay the outstanding debt on its existing warehouse line
of credit with Morgan Guaranty Trust Company of New York, and the new warehouse
line should enable the Company to continue to grow its portfolio. We believe
that the Company's financial resources are currently adequate for its
anticipated liquidity needs, including the quarterly payment of dividends."
Set forth below are the Company's consolidated balance sheets as of
December 31, 1998 and December 31, 1997 and consolidated statements of earnings
for the three months and year ended December 31, 1998 and for the 1997 short
period. Amounts are expressed in thousands, except for share data.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
Assets 1998 1997
---- ----
<S> <C> <C>
Cash and interest bearing deposits $ 23,398 $ 11,902
Repurchase agreements - 148,711
Mortgage loans, net of loan loss allowance of $8,027 and
$1,727, respectively 556,648 272,009
Real property, net 107,663 -
Securities available-for-sale, at estimated fair value 57,671 59,321
Accrued interest receivable 6,410 2,085
Other assets 5,384 1,109
-------- --------
Total Assets $757,174 $495,137
======== ========
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Liabilities
Dividends and distributions payable $ 9,405 $ 4,485
Accrued expenses, payables and other liabilities 7,828 10,950
Borrowings under secured warehouse facility 279,000 -
Borrowings under secured bank loan 3,557 -
Mortgage loans secured by real property 48,575 -
-------- --------
Total Liabilities 348,365 15,435
-------- --------
Stockholders' Equity
Common stock, $.0001 par value,
Authorized 500,000,000 shares, 28,500,000
and 34,500,000 shares issued, respectively 3 3
Additional paid-in capital 425,615 481,856
Accumulated other comprehensive income 221 169
Distributions in excess of earnings (17,030) (2,326)
-------- --------
Total Stockholders' Equity 408,809 479,702
-------- --------
Total Liabilities and Stockholders' Equity $757,174 $495,137
======== ========
</TABLE>
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
Consolidated Statements of Earnings
<TABLE>
<CAPTION>
Three Months or Twelve Months or
Short Period ended Short Period ended
December 31, December 31,
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Interest Income
Mortgage loans $ 12,776 $ 1,676 $ 41,130 $ 1,676
Securities available-for-sale 1,522 1,403 6,153 1,403
Repurchase agreements and interest bearing deposits 170 3,388 2,454 3,388
----------- ----------- ----------- -----------
Total Interest Income 14,468 6,467 49,737 6,467
Real Property Rental Income 3,418 - 7,684 -
----------- ----------- ----------- -----------
Total Income 17,886 6,467 57,421 6,467
----------- ----------- ----------- -----------
Operating Expenses
Management fees 1,936 940 6,319 940
Interest expense 5,690 - 11,165 -
Provision for loan losses 3,000 - 6,300 -
Write-down of securities available-for-sale 1,321 - 4,554 -
Depreciation of real property 793 - 1,755 -
Real property operating expenses 858 - 1,872 -
Stock options issued to manager and its employees 97 2,550 97 2,550
Due diligence expenses 793 487 1,659 487
Other 358 331 1,456 331
----------- ----------- ----------- -----------
Total Operating Expenses 14,846 4,308 35,177 4,308
----------- ----------- ----------- -----------
Net Earnings $ 3,040 $ 2,159 $ 22,244 $ 2,159
=========== =========== =========== ===========
Earnings per share
Basic $0.11 $0.06 $0.68 $0.06
Diluted $0.11 $0.06 $0.68 $0.06
Weighted average common shares outstanding
Basic 28,580,710 34,500,000 32,570,974 34,500,000
Diluted 28,581,348 34,678,550 32,588,634 34,678,550
</TABLE>
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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).
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, and 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, August 14, 1998 and November 13, 1998,
the amendments with respect thereto and other filings made by the Company with
the SEC.
The Company will hold a teleconference on Thursday, February 4, 1999 at
11:00 A.M. Pacific Time, 2:00 P.M. Eastern Time. The phone number for the
teleconference is (719) 457-2645 and confirmation code is 616128. To access a
replay of the teleconference, please call (719) 457-0820 on or before
February 6, 1999.
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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