SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): February 18, 1998
CRIIMI MAE Inc.
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(Exact name of registrant as specified in its charter)
Maryland 1-10360 52-1622022
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive office) (Zip code)
Registrant's telephone number including area code: (301) 816-2300
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(Former name or former address, if changed since last report)
Exhibit Index on Page 4<PAGE>
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Item 5. Other Events.
CRIIMI MAE Inc.(the "Company") has issued, pursuant to its registration
statement on Form S-3 filed with the Securities and Exchange Commission on
October 21, 1997 (Commission File Number 333-38409)(the "Registration
Statement"), as supplemented by a Prospectus Supplement thereto dated February
20, 1998 (the "Prospectus Supplement"), 150,000 shares of Series C Cumulative
Convertible Preferred Stock of the Company, $.01 par value per share (the
"Series C Preferred Shares"), at an aggregate offering price of $15,000,000.
The Series C Preferred Shares were placed with a single European institutional
investor pursuant to the terms of a Preferred Stock Purchase Agreement dated
as of March 19, 1997, as amended by the First Amendment to Preferred Stock
Purchase Agreement dated as of May 9,1997 and by the Second Amendment to
Preferred Stock Purchase Agreement, a copy of which is attached hereto as
Exhibit 4.1, (collectively, the "Purchase Agreement"), which is incorporated
in its entirety in response to this Item 5 by reference to the 8-K filed by
the Company with the Securities and Exchange Commission on September 23, 1997.
In connection with this offering, the Company paid $486,000 (equal to $3.00
per Series C Preferred Share and $36,000 for acceleration of the put option)
to exercise a put option the Company acquired from such European institutional
investor pursuant to the Purchase Agreement. The Company issued a press
release on February 20, 1998 concerning the issuance of the Series C Preferred
Shares, a copy of which is attached hereto as Exhibit 99.1, and is
incorporated in its entirety by reference in response to this Item 5.
The terms and provisions of the Series C Preferred Shares are set forth in
Articles Supplementary to the Articles of Incorporation of the Company which
is incorporated in its entirety in response to this Item 5 by reference to the
8-K filed by the Company with the Securities and Exchange Commission on
September 23, 1997.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
c) Exhibits
4.1 Second Amendment to Preferred Stock Purchase Agreement
99.1 Press Release
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SIGNATURES
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 thereunto duly authorized.
CRIIMI MAE Inc.
Date: February 20, 1998 By: /s/ H. William Willoughby
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H. William Willoughby
President
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INDEX TO EXHIBITS
FORM 8-K
Page
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4.1 Second Amendment to Preferred Stock Purchase Agreement
99.1 Press Release
SECOND AMENDMENT TO
PREFERRED STOCK PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO PREFERRED STOCK PURCHASE AGREEMENT (this
"Amendment") is made and entered into as of February 18, 1998 between CRIIMI
MAE Inc., a Maryland corporation (the "Company"), and MeesPierson Investments
Inc., a Delaware corporation (the "Investor").
WHEREAS, the Company and MeesPierson Clearing Services B.V., a
Netherlands corporation ("MeesPierson"), entered into a Preferred Stock
Purchase Agreement dated as of March 19, 1997, as amended (the "Agreement"),
pursuant to which, among other things, MeesPierson agreed to purchase from the
Company up to 300,000 shares of the Company's Series C Preferred Stock, par
value $.01 per share (the "Series C Preferred Stock"), on the terms and
subject to the conditions set forth therein;
WHEREAS, on December 30, 1997, MeesPierson assigned an undivided
interest in and to all rights and obligations under the Agreement to the
Investor; and
WHEREAS, the Parties wish to further amend the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements made herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the Parties agree as follows:
I. Definitions. Unless otherwise defined in this Amendment, all
capitalized terms shall have the meanings given such terms in the
Agreement.
II. Amendment to Article I. Article I of the Agreement is hereby amended
by deleting subsection 1.1(a)(ii) in its entirety and replacing it
with the following:
"(ii) if upon exercise of the put option the Investor would
beneficially own more than 250,000 shares of the Series C Preferred
Stock or"
III. Ratification. Except as expressly amended by this Amendment, the
Agreement shall remain in full force and effect and the Agreement is
hereby ratified and confirmed as of the date first written above.
IV. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Maryland, without regard to
the principles of conflicts of law of such state.
V. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
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VI. Restatement. The applicable provisions of this Amendment may be
incorporated into an amended and restated version of the Agreement,
which Agreement as amended and restated shall be the Stock Purchase
Agreement dated as of March 19, 1997, as amended as of the date of
this Amendment. All references in an amended and restated version of
the Agreement to "as of the date hereof" and similar language are
understood to mean March 19, 1997.
VII. Corporate Authority; Etc. Each of the Company and the Investor
represents that it has taken all necessary action to authorize the
execution, delivery and performance of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
CRIIMI MAE INC. MEESPIERSON INVESTMENTS INC.
By: /s/ Cynthia O. Azzara By: /s/ Bruce Bernstein
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Name: Cynthia O. Azzara Name: Bruce Bernstein
Title: Chief Financial Officer Title: President/CEO
By: /s/ John T. Carras
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Name: John T. Carras
Title: EVP and General Counsel
Contact: Susan B. Railey
for shareholders and securities brokers
(301) 468-3120
Andrew P. Blocher
for institutional investors
(301) 231-0371
James T. Pastore FOR IMMEDIATE RELEASE
for news media
(202) 546-6451
CRIIMI MAE Reports Record Earnings for 1997
ROCKVILLE, MD, February 20, 1998 -- (NYSE:CMM) -- CRIIMI MAE Inc., the
Rockville, Maryland based full-service commercial mortgage company, today
reported record earnings and dividends for 1997.
Tax basis income available to common shareholders for 1997 was a record
$54.1 million, 39 percent greater than the prior record of $39.0 million for
1996. Tax basis income per common share was $1.45 for 1997 compared to $1.27
for 1996. For 1997, GAAP basis net income available to common shareholders
increased 50 percent to $47.7 million ($1.29 per basic share and $1.25 per
share on a diluted basis) from the 1996 total of $31.7 million ($1.03 per
share on both a basic and diluted basis).
For the fourth quarter ending December 31, 1997, CRIIMI MAE reported tax
basis income available to common shareholders of $14.3 million, or 36 cents
per share. Tax basis income available to common shareholders was 40 percent
greater than the $10.2 million, or 32 cents per share, reported for fourth
quarter 1996. On a GAAP basis, fourth quarter 1997 net income available to
common shareholders increased 29 percent to $11.6 million (29 cents per basic
share and 28 cents per share on a diluted basis) from the $9.0 million (29
cents per basic share and 28 cents per share on a diluted basis) reported for
the fourth quarter of 1996.
The company paid a record quarterly common dividend of 37 cents per share
on December 31, 1997. Total common dividends for 1997 were $1.42 per share,
up 16% from $1.22 for 1996.
The primary factor in greater tax and GAAP basis earnings has been an
increase in recurring earnings due to growth in CRIIMI MAE's portfolio of
subordinated commercial mortgage-backed securities (CMBS). Non-recurring
capital gains for both tax basis and GAAP earnings have resulted from mortgage
dispositions of a subsidiary which completed its planned final liquidation in
1997.
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For the year ended December 31, 1997, tax basis recurring earnings were
$46.4 million, or $1.24 per common share, an increase of 50 percent over the
$30.8 million, or $1.00 per common share, reported for 1996. On a GAAP basis,
recurring earnings increased 44 percent from $26.2 million (85 cents per share
on both a basic and a diluted basis) in 1996 to $37.9 million ($1.02 per basic
share and 99 cents per share on a diluted basis) in 1997.
Tax basis recurring earnings were $14.3 million for the fourth quarter,
an increase of 40 percent from the $10.2 million reported for last year's
fourth quarter. Tax basis recurring income per share was 36 cents for the
fourth quarter of 1997 compared to 32 cents for the fourth quarter of 1996.
CRIIMI MAE Chairman William B. Dockser said, "Our record earnings for
1997 reflect the successful growth of our core business and expansion into
related business lines. During the year, we acquired more than $800 million of
subordinated CMBS at a purchase price of approximately $554 million and
increased our commercial servicing portfolio to approximately $16.5 billion.
We continue to originate commercial real estate loans for our own
securitization program."
1997 PERFORMANCE
CRIIMI MAE acquired more than $800 million face amount of CMBS from 11
securitizations in 1997 at a cost of approximately $554 million. As a direct
result of these acquisitions, CRIIMI MAE added $10 billion of additional
servicing to its portfolio, including $2.2 billion of master servicing
responsibilities. The servicing functions that CRIIMI MAE performs permits
active oversight and management of its mortgage assets.
The company successfully launched its "No-Lock" commercial mortgage
program, originating more than $210 million of loans in 1997, including more
than $183 million in the fourth quarter. The "No-Lock" mortgage product gives
commercial borrowers the flexibility to prepay their mortgages at any time
based on a predetermined schedule of prepayment penalties. CRIIMI MAE
designed the "No-Lock" program to give the company a competitive edge with
commercial mortgage borrowers. Unlike CRIIMI MAE's "No-Lock" program, most
competing commercial mortgages impose prepayment lock-outs and yield
maintenance premiums that serve to discourage or prevent prepayments.
CRIIMI MAE raised net proceeds of $208 million in 1997, including $98
million through a five-year unsecured debt offering, and $15 million of
convertible preferred equity. In early 1998, the company raised common equity
of $34 million. Additionally, CRIIMI MAE exercised its put option to sell an
additional 150,000 shares of preferred stock for a sale price of $15 million.
These aggregate net proceeds will be used to repay working capital lines,
acquire CMBS and/or fund commercial loan originations.
1998 BUSINESS STRATEGY
CRIIMI MAE aims to increase recurring earnings for 1998 through the
growth and expansion of its core business lines of acquiring, originating,
securitizing and servicing commercial mortgages and mortgage related assets.
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CRIIMI MAE plans to originate more than $1 billion of commercial loans
through the "No-Lock" program in 1998 and securitize these loans through two
collateralized mortgage obligations (CMOs). The first CMO, scheduled for the
second quarter, is expected to total in excess of $350 million.
In the CMO, CRIIMI MAE will retain the mortgage loans on its books, with
the intent to hold the loans until maturity or prepayment. The company will
finance a portion of the loans by creating and placing investment grade
securities with investors. The company will retain the balance of the cash
flow. CRIIMI MAE will also serve as master and special servicer for the loan
pool.
CRIIMI MAE President H. William Willoughby said, "Mortgage lending and
securitization are an integral part of our business plan in 1998. CRIIMI MAE
will finance commercial mortgages through securitization in the capital
markets. We expect to earn a positive spread between the rate we earn on
mortgage loans and the rate paid to CMBS investors. In addition, the re-
securitization of our own CMBS, scheduled for the second quarter, allows us to
better match the duration of our assets and liabilities, reduce floating-rate,
recourse debt and generate additional capital to fund growth."
CRIIMI MAE plans to re-securitize subordinated CMBS with a face amount in
excess of $1.5 billion in the second quarter of 1998. The transaction,
similar to CRIIMI MAE's pioneering re-securitization of December 1996, is
expected to match fund liabilities equal to approximately one-third of the
face amount of the CMBS pledged, and generate excess proceeds to fund a
portion of the 1998 business plan.
CRIIMI MAE plans to purchase more than $600 million of CMBS during 1998.
In conjunction with the Company's anticipated growth in the loan origination
program and subordinated CMBS acquisitions, the servicing portfolio will
increase accordingly. The additional servicing will provide the Company with
the right to actively manage its assets, as well as generate additional
income.
CRIIMI MAE is a fully-integrated, full-service commercial mortgage
company focused on originating, acquiring, securitizing and servicing
commercial mortgages and mortgage-related assets. As of December 31, 1997,
the company had assets of approximately $1.9 billion, including $1.1 billion
of CMBS and $605 million of government-insured multifamily mortgages.
Certain matters discussed in this news release may constitute forward-
looking statements within the meaning of the federal securities laws. Actual
results and the timing of certain events could differ materially due to a
number of factors, including general economic conditions, interest rates and
other factors outlined in the company's SEC reports, including the company's
annual report on Form 10-K for the fiscal year ended December 31, 1997.
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CRIIMI MAE Inc.
<TABLE>
<CAPTION>
For the three months For the twelve months
ended December 31, ended December 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
TAX BASIS INCOME:
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Income:
Mortgage Income $12,344,297 $13,331,516 $ 49,341,904 $ 54,826,942
Income from Subordinated CMBs 27,193,223 14,422,001 86,166,457 43,631,967
Equity in earnings from 1,035,505 1,469,878 4,104,585 4,293,205
investments
Other investment income 748,532 515,107 2,151,246 2,118,570
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41,321,557 29,738,302 141,764,192 104,858,664
Expenses:
Interest expense 23,584,090 18,866,056 79,573,789 64,502,839
General and administrative 1,970,524 1,902,308 9,457,552 7,235,267
Fees to related party - 39,826 6,483 215,990
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25,554,614 18,808,190 89,037,824 71,853,896
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Ordinary income 15,766,943 10,830,112 52,726,388 32,914,788
Net gains on mortgage
dispositions 211,237 336,704 7,815,165 8,404,278
Capital Gain on installment
Note - 714,649 - -
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Tax basis income before
preferred dividends $ 15,978,180 $ 11,981,465 $ 60,541,533 $ 42,533,157
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Dividends paid on
preferred shares 1,688,604 1,798,733 6,472,540 3,526,451
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Tax basis income available
to common shareholders $ 14,289,576 $ 10,182,732 $ 54,068,993 $ 39,006,706
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*Net of minority interest, where applicable
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TAX BASIS INCOME PER SHARE:
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Recurring income before
gains from CFR $ 0.36 $ 0.32 $ 1.24 $ 1.00
Capital gain from CFR 0.00 0.00 0.21 0.27
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Total tax basis income
per share $ 0.36 $ 0.32 $ 1.45 $ 1.27
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Weighted Average Shares 40,131,551 31,374,163 37,334,034 30,773,621
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Dividends Paid on
common shares $ 0.37 $ 0.32 $ 1.42 $ 1.22
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<TABLE>
<CAPTION>
For the three months For the twelve months
ended December 31, ended December 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
FINANCIAL STATEMENT NET INCOME (ON A CONSOLIDATED BASIS):
Income:
Mortgage income $ 12,344,297 $ 13,812,903 $ 49,425,401 $ 56,911,670
Income from Subordinated CMBS 24,975,547 13,800,068 79,669,816 41,713,126
Equity in earnings from
investments 894,679 2,022,399 3,612,230 4,431,977
Other investment income 848,420 629,976 2,609,354 2,898,646
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39,062,943 30,265,346 135,316,801 105,955,419
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Expenses:
Interest expense 23,196,360 16,468,002 77,919,414 63,078,767
General and administrative 1,908,963 1,940,427 9,570,861 7,409,143
Fees to related party - 70,446 11,468 382,050
Amortization of assets
acquired in the Merger 719,391 719,391 2,877,564 2,881,824
Adjustment to hedges for
valuation and sales - 144,294 28,250 178,750
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25,824,714 19,342,560 90,407,557 73,930,534
Income before mortgage
dispositions and minority
interests in consolidated
subsidiaries 13,238,229 10,922,786 44,909,244 32,024,885
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Net gains on mortgage
dispositions 200,141 333,350 17,343,481 9,601,360
Minority interests in
consolidated subsidiaries (179,502) (464,081) (8,065,109) (6,386,388)
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Net income $ 13,258,868 $ 10,792,055 $ 54,187,616 $ 35,239,857
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Dividends paid on
preferred shares 1,688,604 1,798,733 6,472,540 3,526,451
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Net Income available to
common shareholders $ 11,570,264 $ 8,993,322 $47,715,076 $31,713,406
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FINANCIAL STATEMENT EARNINGS PER SHARE:
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Recurring income before gains
from CFR-Basic $ 0.29 $ 0.29 $ 1.02 $ 0.85
Capital gain from CFR-Basic 0.00 0.00 0.27 0.18
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Total GAAP basis income
per share -Basic $ 0.29 $ 0.29 $ 1.29 $ 1.03
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Weighted Average Shares
-Basic 39,945,923 31,217,582 36,993,130 30,665,052
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Recurring income before
gains from CFR-Diluted $ 0.28 $ 0.28 $ 0.99 $ 0.85
Capital gain from CFR-Diluted 0.00 0.00 0.26 0.18
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Total GAAP basis income
per share -Diluted $ 0.28 $ 0.28 $ 1.25 $ 1.03
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Weighted Average Shares
-Diluted 41,892,982 31,774,258 38,351,640 31,008,643
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</TABLE>
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<TABLE>
<CAPTION>
BALANCE SHEET DATA:
As of December 31, As of December 31,
1997 1996
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<S> <C> <C>
Mortgages and mortgage security collateral $ 605,113,741 $ 691,109,722
Subordinated CMBS $ 1,114,479,846 $ 564,335,400
Total assets $ 1,873,305,488 $ 1,367,245,298
Shareholders' Equity $ 444,980,987 $ 346,671,263
</TABLE>
