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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)
January 29, 1996
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CRIIMI MAE INC.
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(Exact name of registrant as specified in charter)
Maryland
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(State or other jurisdiction of incorporation)
1-10238 52-1622022
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(Commission (IRS Employer
File Number) Identification No.)
11200 Rockville Pike,
Rockville, Maryland 20852
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(Address of (Zip Code)
Executive offices)
(Registrant's telephone number, including area code)
301/816-2300
Not Applicable
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(Former Name or Former Address, if Changed since Last Report)
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Item 5. Other Events
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On January 29, 1996, CRIIMI MAE Inc. issued a press release announcing an
expected increase in its 1996 dividend, along with other matters. A copy of the
press release is attached as Exhibit 20.1 to this Form 8-K and is incorporated
herein by reference in response to this Item.
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Exhibit 20.1
CRIIMI MAE Expects 26 Percent Higher Dividend
for 1996;
Announces $1.16 Per Share Base Dividend Estimate
Rockville, MD, January 29, 1995, (NYSE:CMM)--CRIIMI MAE Inc., a full service
mortgage company and self-administered real estate investment trust (REIT), said
today it expects its 1996 dividend to be at least $1.16 per share, or at least
29 cents a share per quarter, based on certain stated assumptions. This would
represent an increase of approximately 26 percent over 1995's dividend of 92
cents per share.
In a letter to shareholders dated today, CRIIMI MAE chairman William B. Dockser
and president H. William Willoughby said they expect 1996's tax basis income and
dividend to increase primarily due to two factors: earnings from investments in
subordinated securities backed by uninsured multifamily and commercial mortgages
and new lines of business acquired in the June 1995 merger. Those new lines of
business include mortgage servicing, advisory services and origination.
The board of directors is expected to declare the first quarter's dividend in
early March, basing the exact amount on conditions at that time.
Dividend Assumptions
The letter from management said assumptions underlying the base dividend
estimate included constant levels of investments, corporate debt, interest
rates, mortgage servicing volume, and equity. Specifically:
oIt assumes CRIIMI MAE's earnings "will come from assets the company and its
subsidiaries currently own." These include $669 million of government insured
multifamily mortgages (owned directly by CRIIMI MAE or its financing
subsidiaries) and $278 million of uninsured investments in subordinated
securities. It assumes no losses or earnings reductions resulting from
prepayments or other mortgage dispositions (other than mortgage dispositions to-
date), though such dispositions are possible.
oAlthough CRIIMI MAE plans to invest in additional uninsured mortgage assets
during 1996, the base dividend estimate assumes no new investments in either
government insured or uninsured mortgage assets.
oThe base dividend estimate includes net gains from first quarter mortgage
dispositions, including the disposition by CRIIMI MAE's subsidiary, CRI
Liquidating REIT, Inc., of half of its remaining mortgage portfolio. As a
result of those first quarter mortgage
dispositions by CRI Liquidating REIT, CRIIMI MAE will recognize tax basis
capital gains during 1996 of approximately 27 cents per share based on the
current number of shares outstanding.
oThe base dividend estimate assumes that interest rates and CRIIMI MAE's debt
levels remain constant throughout 1996. As of January 30, 1996 about 76
percent of total debt had long-term, fixed rates and 24 percent had short-term
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floating rates. Higher short-term interest rates would increase
borrowing costs on short-term, floating-rate debt. However, CRIIMI
MAE's interest rate cap agreements would limit borrowing cost increases.
oCRIIMI MAE financed a portion of its investments using short-term, floating-
rate debt. If the terms of certain of this debt are not extended or if
alternate financing is unavailable, CRIIMI MAE could be forced to sell assets at
a loss to pay off that debt. Also, if these assets are unavailable or
inadequate to pay off debt, there could be a substantial impact on CRIIMI MAE.
However, CRIIMI MAE is "actively exploring options to refinance" this short-
term, floating-rate debt, and hopes to do so during 1996.
oAlthough CRIIMI MAE intends to build its loan servicing business during 1996,
the base dividend estimate assumes no increase in loan servicing and advisory
fees.
oThough CRIIMI MAE plans to issue additional equity in 1996, the base dividend
estimate makes no adjustment for new equity.
Investment Policy Changes
The letter also summarizes new borrowing and investment policies approved last
week by the board of directors. The policies are part of CRIIMI MAE's efforts
to increase income, stabilize earnings, and take advantage of opportunities in
the marketplace.
The new policies aim to "monitor and direct how CRIIMI MAE funds its investments
in order to try to minimize the risk of loss by evaluating the perceived levels
of risk associated with various investment types." The policies are also
designed to "permit a broad range of types of investments by CRIIMI MAE.
The letter to shareholders says, "CRIIMI MAE may invest in government insured or
uninsured assets backed by multifamily and other commercial mortgages. However,
the majority of investments must remain, on an overall basis, in mortgages and
mortgage-related assets backed by multifamily housing."
Some specific investment limitations include:
oCRIIMI MAE's overall debt to equity ratio may not exceed five-to-one.
oCertain specific asset types will have maximum debt-to-equity ratios.
oAt least 75 percent of CRIIMI MAE's floating-rate debt must be hedged.
1996 Strategies
The letter says business strategies for 1996 and beyond are designed to "enhance
sustained earnings." Specific strategies are to:
oIssue additional equity, and invest the proceeds primarily in uninsured
assets, including subordinated securities.
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oBegin originating uninsured multifamily and commercial mortgages -- a
process that is now underway.
oBegin assembling loan pools for securitization, using mortgages the
company originates or acquires. CRIIMI MAE anticipates retaining the
subordinated securities backed by these pools and servicing the underlying
loans. The senior securities would be sold to other investors.
oBuild the company's servicing business as CRIIMI MAE originates, acquires,
and securitizes assets.
oContinue to explore alternatives to replace the short-term, floating-rate
debt with longer-term financing.
The letter from Mr. Dockser and Mr. Willoughby concludes by stating, "Entering
1996, we remain optimistic about CRIIMI MAE's short-term and long-term
prospects. We believe our financial condition is strong and we will continue
our efforts to take advantage of sound opportunities in the marketplace."
CRIIMI MAE Inc. is a full-service mortgage company structured as a self-managed
and self-administered real estate investment trust (REIT). Its mortgages and
mortgage-related investments are backed by multifamily housing and other
commercial properties. At Dec. 31, 1995, assets were approximately $1.2
billion.
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S I G N A T U R E
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed by undersigned thereunto
duly authorized.
CRIIMI MAE Inc.
By: /s/ Cynthia O. Azzara
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Cynthia O. Azzara
Its: Senior Vice President and
Chief Financial Officer
