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):
October 15, 1998
CLARION COMMERCIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of incorporation)
001-14167
(Commission File Number)
13-398895
(I.R.S. Employer Identification Number)
335 Madison Avenue, New York, New York 10017
(Address of principal executive offices including zip code)
(212) 883-2500
(Registrant's telephone number
including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
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On October 15, October 20, October 21 and October 22, 1998, Clarion
Commercial Holdings, Inc. ("Clarion") disposed of 13 classes of commercial
mortgage-backed securities in open market transactions to unaffiliated parties
for approximately $97.8 million. The news release announcing the sale of such
assets, dated October 30, 1998, is incorporated by reference herein, and is
attached and filed herewith as Exhibit 99.4.
Item 7. Financial Statements and Exhibits
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(c) Exhibits
The following exhibit is filed as part of this report:
(99.4) News release of Clarion Commercial Holdings, Inc.,
dated October 30, 1998.
<PAGE>
SIGNATURES
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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.
CLARION COMMERCIAL HOLDINGS, INC.
(Registrant)
Date: October 30, 1998 By: /s/ Daniel Heflin
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Daniel Heflin
Chief Executive Officer and President
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
99.4 The news release of Clarion Commercial Holdings, Inc., dated
October 30, 1998.
Exhibit 99.4
Contact: [Joanne Vitale
212-883-2536]
CLARION COMMERCIAL HOLDINGS
ANNOUNCES THIRD QUARTER RESULTS, ASSET SALES
NEW YORK, October 30, 1998 - Clarion Commercial Holdings, Inc. (NYSE: CLR) today
reported a net loss of $48.2 million for the quarter ending September 30, 1998,
resulting primarily from unrealized losses in the Company's portfolio of
securities and hedge positions, $25.7 million of which was realized by the
disposition of securities subsequent to quarter end.
Daniel Heflin, President and CEO of Clarion Commercial Holdings, commented on
the state of the market and the Company's performance. "The unprecedented spread
widening in the commercial mortgage backed securities market, caused by the
global credit crunch, has adversely affected the market value of the Company's
assets. In marking the securities in our portfolio to market, firm bids were
used, as available, and when unavailable, the spreads used by our lender in
valuing our assets as collateral were applied. With continued pressure on market
participants to sell assets, the Company's assets may decline further on a
mark-to-market basis. While there has been a dislocation in the capital markets,
the fundamentals of the commercial real estate market are strong and the cash
flows of our remaining asset base continue to perform as expected," said Mr.
Heflin.
The Company, as mentioned above, sold 13 classes of commercial mortgage backed
securities subsequent to the close of the third quarter. The assets were sold
for approximately $97.8 million and, together with losses associated with the
closing of related hedge positions, resulted in a realized loss of approximately
$25.7 million. The Company estimates that its portfolio of remaining assets has
incurred incremental unrealized losses of approximately $4.0 million since
quarter end, giving the Company an estimated book value per share of $7.80.
Mr. Heflin continued, "The Company sold certain assets to reduce its sensitivity
to market volatility and improve liquidity. As a result of the asset
dispositions, the Company's debt to equity ratio has been reduced from 3.8x to
approximately 1.9x. The Company continues to diligently monitor its asset base
and debt structure, and is currently evaluating various alternatives, including
sales of equity, to facilitate growth and reduce exposure to possible further
short term market volatility."
As previously announced, the Company declared and paid distributions of $0.45
per share to shareholders of record as of September 30, 1998. The distributions
that the Company pays are based on income calculated for tax purposes, rather
than GAAP income.
Clarion Commercial Holdings, Inc. is a specialty finance company that
specializes in commercial
<PAGE>
real estate investments. The Company is managed by Clarion Capital, LLC who,
together with its affiliates, manages a broad range of real estate investments
including real estate property, REIT stocks and debt investments.
Certain matters discussed in this press release may constitute forward-looking
statements within the meaning of the federal securities laws. Clarion Commercial
Holdings, Inc.'s actual results could differ materially from those anticipated
in such forward-looking statements as a result of certain factors, including
those detailed from time to time in the Company's reports and filings with the
Securities and Exchange Commission. The Company 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.
Clarion Commercial Holdings, Inc. & Subsidiaries
Consolidated Statement Of Operations
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the period June 2, 1998
For the three months (commencement of operations)
ended September 30, 1998 through September 30, 1998
<S> <C> <C>
Income:
Interest income from securities - trading $ 7,358 $ 8,993
Realized losses from securities - trading (1,099) (1,310)
Unrealized losses from securities - trading (48,041) (47,906)
Interest income from commercial mortgage loan 231 304
Income from other investments 151 182
Interest income from cash and cash equivalents 16 31
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Total income (loss) $ (41,384) $ (39,706)
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Expenses:
Interest $ 5,544 $ 6,365
Management fee 241 321
Other expenses 1,002 1,022
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Total expenses $ 6,787 $ 7,708
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Net Loss $ (48,171) $ (47,414)
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Net Loss per share:
Basic $ (9.80) $ (9.52)
Diluted $ (9.80) $ (9.52)
Weighted average shares
Basic 4,916,584 4,978,336
Diluted 4,916,584 4,978,336
</TABLE>
Clarion Commercial Holdings, Inc. & Subsidiaries
Condensed Consolidated Statement Of Financial Condition
September 30, 1998
(Unaudited)
(in thousands, except share data)
Assets:
Cash and cash equivalents $ 467
Securities - trading 188,206
Commercial mortgage loan receivable 12,987
Other investments 7,309
Accrued interest receivable 1,858
Other assets 133
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Total assets $ 210,960
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Liabilities And Stockholders' Equity:
Repurchase agreements $ 159,903
Distributions payable 2,165
Other liabilities 6,338
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Total liabilities $ 168,406
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Stockholders' equity: $ 42,554
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Total liabilities and stockholders' equity $ 210,960
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