<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT OF 1934
Commission File Number 0-23972
AMERICAN MORTGAGE ACCEPTANCE COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 13-6972380
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
============= =============
September 30, December 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
Investments in mortgage loans $ 25,935,027 $ 28,893,482
Investments in GNMA certificates-
available for sale 5,825,159 9,464,437
Commercial mortgage-backed security-
related investment 35,846,794 34,347,403
Deposit with broker as collateral for
security sold short 34,684,560 37,733,101
Cash and cash equivalents 9,123,463 3,802,298
Accrued interest receivable 925,148 1,180,115
Note receivable 7,264,093 0
Investment in unconsolidated subsidiary 1,157,209 0
Other assets 560,714 144,605
----------- -----------
Total assets $121,322,167 $115,565,441
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Repurchase facility payable $ 20,061,000 $ 19,127,000
Secured borrowings 8,794,081 0
Accrued interest payable 341,304 407,952
Accounts payable and accrued expenses 255,542 122,397
Due to Advisor and affiliates 330,116 433,265
Distributions payable 1,391,503 1,391,503
Government security sold short 34,695,345 36,991,959
----------- -----------
Total liabilities 65,868,891 58,474,076
----------- -----------
Commitments and contingencies
Shareholders' equity:
Shares of beneficial interest; $.10 par value;
12,500,000 shares authorized; 4,213,826 issued
and 3,838,630 outstanding 421,383 421,383
Treasury shares of beneficial interest;
375,196 shares (37,520) (37,520)
Additional paid-in capital 68,840,500 68,840,500
Distributions in excess of net income (13,675,651) (11,878,059)
Accumulated other comprehensive loss (95,436) (254,939)
----------- -----------
Total shareholders' equity 55,453,276 57,091,365
----------- -----------
Total liabilities and shareholders' equity $121,322,167 $115,565,441
=========== ===========
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
================== =================
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2000 1999 2000 1999
------------------ -----------------
<S> <C> <C> <C> <C>
Revenues:
Interest income:
Mortgage loans $ 500,295 $ 465,994 $1,188,021 $1,484,986
GNMA certificates 117,701 195,315 355,962 591,859
Commercial mortgage-
backed security-related
investment 960,467 10,187 2,867,659 10,187
Temporary investments 624,146 221,459 1,845,770 580,373
Other income 298,660 77,926 444,828 304,976
--------- --------- --------- ---------
Total revenues 2,501,269 970,881 6,702,240 2,972,381
--------- --------- --------- ---------
Expenses:
Interest 1,044,215 6,061 2,856,936 6,061
General and administrative 425,520 250,841 1,015,710 687,104
Amortization 26,227 0 60,229 0
Organization costs 0 16,405 0 364,818
--------- --------- --------- ---------
Total expenses 1,495,962 273,307 3,932,875 1,057,983
--------- --------- --------- ---------
Other gain (loss):
Net gain (loss) on commercial
mortgage-backed
security-related invest-
ment and government
securities sold short 246,341 0 (464,436) 0
Gain (loss) on repayment
of mortgage loans and
GNMA certificates (8,371) (485) 71,991 3,272,300
--------- --------- --------- ---------
Total other gain (loss) 237,970 (485) (392,445) 3,272,300
--------- --------- --------- ---------
Net income $1,243,277 $ 697,089 $2,376,920 $5,186,698
========= ========= ========= =========
Net income per share
(basic and diluted) $ .32 $ .18 $ .62 $ 1.35
========= ========= ========= =========
Weighted average
shares outstanding
(basic and diluted) 3,838,630 3,838,630 3,838,630 3,843,044
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Statement of Changes in Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Shares of Treasury Shares of
Beneficial Interest Beneficial Interest Additional Distributions
------------------- ------------------- Paid-in in Excess Comprehensive
Shares Amount Shares Amount Capital of Net Income Income
--------- -------- ------- ------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000 4,213,826 $421,383 (375,196) $(37,520) $68,840,500 $(11,878,059)
Comprehensive income:
Net income 0 0 0 0 0 2,376,920 $2,376,920
---------
Other comprehensive income:
Net unrealized gain on GNMA
certificates:
Net unrealized holding gain arising
during the period 217,912
Less: reclassification adjustment for
gains included in net income (58,409)
---------
Other comprehensive income 159,503
---------
Comprehensive income $2,536,423
=========
Distributions 0 0 0 0 0 (4,174,512)
--------- ------- ------- ------ ---------- ----------
Balance at September 30, 2000 4,213,826 $421,383 (375,196) $(37,520) $68,840,500 $(13,675,651)
========= ======= ======= ====== ========== ==========
<CAPTION>
Accumulated
Other
Comprehensive
Income (Loss) Total
------------- -----------
<S> <C> <C>
Balance at January 1, 2000 $ (254,939) $57,091,365
Comprehensive income:
Net income 0 2,376,920
Other comprehensive income:
Net unrealized gain on GNMA
certificates:
Net unrealized holding gain arising
during the period
Less: reclassification adjustment for
gains included in net income
Other comprehensive income 159,503 159,503
Comprehensive income
Distributions 0 (4,174,512)
--------- ----------
Balance at September 30, 2000 $ (95,436) $55,453,276
========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
======================
Nine Months Ended
September 30,
----------------------
2000 1999
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $2,376,920 $5,186,698
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on commercial mortgage-backed
security-related investment (996,801) 0
Loss on government securities sold short 1,461,237 0
Gain on repayment of mortgage loans (13,582) (3,273,202)
Equity income in unconsolidated subsidiary (17,209) 0
Amortization expense-loan premium and
origination costs 148,521 271,936
Accretion of GNMA discount (16,813) (17,414)
Accretion of discount on commercial
mortgage-backed security-related investment (455,959) (1,350)
Amortization of deferred costs relating to
the CMBS-related investment 7,485 0
Amortization - deferred costs 60,229 0
Accretion on deferred income (16,587) 0
(Gain) loss on repayment of GNMA certificates (58,409) 902
Changes in operating assets and liabilities:
Increase in investment in subordinated commercial
mortgage-backed security 0 (35,622,358)
Decrease in deposit with broker as collateral for
security sold short 3,048,541 0
Increase in receivable from broker 0 (38,933,730)
Decrease in accrued interest receivable 254,967 366,177
Decrease (increase) in other assets 19,196 (113,853)
Decrease in due to Advisor and affiliates (103,149) (1,488,240)
Increase in accounts payable and accrued expenses 133,145 66,794
(Decrease) increase in accrued interest payable (66,648) 841,626
Increase in deferred costs relating to the
CMBS-related investment (54,116) 0
Increase in payable for subordinated commercial
mortgage-backed security purchased 0 35,622,358
Purchase of government security (37,299,201) 0
Government security sold short 33,541,350 38,193,276
---------- ----------
Net cash provided by operating activities 1,953,117 1,099,620
---------- ----------
</TABLE>
See accompanying notes to financial statements
-5-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Statements of Cash Flows
(Unaudited)
(continued)
<TABLE>
<CAPTION>
===========================
Nine Months Ended
September 30,
---------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from investing activities:
Increase in investments in mortgage loans (15,548,160) (829,204)
Proceeds from repayments of mortgage loans 10,043,753 20,791,203
Increase in note receivable 0 (1,900,000)
Repayment of note receivable 0 1,900,000
Principal repayments of GNMA Certificates 3,874,003 369,235
Costs relating to repayment of mortgage loan (59,583) 0
Increase in other assets (335,903) 0
Increase in deferred costs 0 (27,113)
--------- ----------
Net cash provided (used) by investing activities (2,025,890) 20,304,121
--------- ----------
Cash flows from financing activities:
Proceeds from repurchase facility payable 2,056,000 0
Repayments of repurchase facility payable (1,122,000) 0
Distribution paid to shareholders (4,174,512) (4,163,738)
Proceeds from issuance of shares of beneficial
interest 0 633,937
Purchase of treasury shares 0 (643,229)
Increase in deferred loan costs (159,631) 0
Secured borrowings 8,794,081 0
--------- ----------
Net cash provided by (used in) financing
activities 5,393,938 (4,173,030)
--------- ----------
Net increase in cash and cash
equivalents 5,321,165 17,230,711
Cash and cash equivalents at the beginning
of the period 3,802,298 2,953,125
--------- ----------
Cash and cash equivalents at the end of the
period $ 9,123,463 $20,183,836
========= ==========
Supplemental information:
Interest paid $ 2,818,753 $ 0
========= ==========
Supplemental disclosure of non cash investing
and financing activities:
Adjustments due to contribution of mortgage loan
to unconsolidated subsidiary:
Increase in investment in unconsolidated subsidiary $ 1,140,000 $ 0
Increase in note receivable 7,264,093 0
Decrease in investments in mortgage loans (8,404,093) 0
--------- ----------
$ 0 $ 0
========= ==========
</TABLE>
See accompanying notes to financial statements
-6-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
Note 1 - General
American Mortgage Acceptance Company (formerly American Mortgage Investors
Trust) (the "Company") was formed on June 11, 1991 as a Massachusetts business
trust. The Company elected to be treated as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended.
On April 6, 1999, the Company received the necessary consent from its
shareholders to approve proposals (the "Proposals") to, among other things,
restructure the Company from a closed-ended, finite-life REIT to a publicly
traded, open-ended, infinite-life operating REIT. In addition to restructuring
the Company, the Proposals, among other matters, permit the Company to modify
its investment objectives, to incur a specified amount of indebtedness and to
list the Company's shares on a national exchange.
As a result of the adoption of the Proposals, the Company was liable for the
transaction expenses. Such expenses amounted to approximately $365,000 for the
nine months ended September 30, 1999 and are classified as organization costs in
the accompanying statements of income.
The Company's new business plan as a publicly traded REIT focuses on three types
of mortgage products: 1) origination of participating FHA insured multifamily
mortgages, 2) origination of construction and permanent mortgage financing for
affordable multifamily housing pursuant to a new venture with Federal National
Mortgage Association ("Fannie Mae"), and 3) acquisition of direct or indirect
interests in commercial mortgage-backed securities.
The current composition of the Company's investment portfolio reflects the
recent change in the Company's business plan and is not comparable to its
investment portfolio prior to April 1999. Furthermore, the Company is still in
the process of implementing its new business plan and, therefore, the current
portfolio should not be considered indicative of the composition of the
portfolio that might be expected in the future.
The Company is governed by a board of trustees comprised of two independent
trustees and one trustee who is affiliated with Related Capital Company
("Related"), a nationwide, fully integrated real estate financial services firm.
The Company has engaged Related AMI Associates, Inc. (the "Advisor"), an
affiliate of Related, to manage its day-to-day affairs.
The accompanying financial statements have been prepared without audit. In the
opinion of management, the financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the financial position of the Company as of September 30, 2000 and the results
of its operations for the three and nine months ended September 30, 2000 and
1999 and its cash flows for the nine months ended September 30, 2000 and 1999.
However, the operating results for the interim periods may not be indicative of
the results for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America ("GAAP") have been condensed or
omitted. It is suggested that these financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-K for the year ended December 31, 1999.
-7-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
The preparation of financial statements in conformity with GAAP requires the
Advisor to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Significant estimates in the financial statements include
the valuation of the Company's commercial mortgage-backed security-related
investment.
In December of 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements." This bulletin summarizes certain of the staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. The Company's management believes that the guidance expressed in the
bulletin does not affect the Company's current revenue recognition policies.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities". This statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. As amended by SFAS No. 137 and 138,
it is effective for the Company beginning with the first quarter of 2001.
Because the Company does not currently utilize derivatives, management does not
anticipate that implementation of this statement will have a material effect on
the Company's financial statements.
In September of 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities". This
statement replaces SFAS No. 125, which had the same name. It revises the
standards for accounting for securitizations and other transfers of financial
assets and collateral and requires certain disclosures, but it carries over most
of SFAS No. 125's provisions without consideration. The Company's management
does not believe that application of this statement will have a material impact
on the Company's financial statements.
Certain prior year amounts have been reclassified to conform to current year
presentation.
-8-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
Note 2 - Investments in Mortgage Loans
Information relating to investments in mortgage loans as of September 30, 2000
and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Date of
Invest- Interest Amount Advancec
ment/ Rate on -----------------------------------
Final FHA FHA Outstand-
Matu Insured Insured Total ing
Descrip -rity Mortgage Mortgage Additional Amounts Loan Origination
Property -ion dat Loans Loan Loans (B) Advanced Balance Costs/Points
----------- ------- -------- ----------- ----------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Town & 330 4/94 7.375%- $9,348,000 $1,039,000 $10,387,000 $0 $0
Country IV Apt. 5/29 9.17%
Apts. Units (A) (C)
Urbana, IL
(G)
Columbiana 204 4/94 (E)(N) 9,106,099 563,000 9,669,099 9,537,842 537,558
Lakes Apts. Apt. 11/35
Columbia, Units (D)(K)
SC
Stony Brook 125 12/95 7.75%- 8,500,000 763,909 9,263,909 763,909 413,492
Village II Apt. 6/37 9.13%
Apts. Units (D)(K) (A) (F)
East Haven,
CT(M)
Hollows 184 4/00 (H) 1,667,007 1,549,200 3,216,207 3,216,207 (197,829)
Apts. Apt. 1/42
Greenville, Units (D)(K)
NC
Elmhurst 313 6/00 (I) 5,169,911 2,874,000 8,043,911 8,043,911 (495,940)
Village Apts. Apt. 1/42
Oveido, FL Units (D)(K)
Reserve at 212 8/00 8.00% 3,066,767 1,987,000 5,053,767 5,053,767 (71,955)
Autumn Crk Apt. 9.20%
Friends- Units (L)
wood, TX
-----------------------------------------------------------------
Total $36,857,784 $8,776,109 $45,633,893 $26,615,636 $185,326
=================================================================
<CAPTION>
Accum-
ulated
Amor-
tization Interest
Additional Earned by 2000
Loans and Balance at Balance at the Accretion Net
Origination September December Company (Amor- Interest
Costs/Points 30,2000 31, 1999 (1) for 2000 tization) Earned
------------ --------- ------------ -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Town & 330 4/94 $0 $0 $9,936,476 $168,642 ($14,470) $154,172
Country IV Apt. 5/29
Apts. Units
Urbana, IL
(G)
Columbiana 204 4/94 476,004 9,599,396 9,705,686 576,470 (67,293) 509,177
Lakes Apts. Apt. 11/35
Columbia, Units (D)(K)
SC
Stony Brook 125 12/95 406,518 770,883 9,251,320 248,466 (66,758) 181,708
Village II Apt. 6/37
Apts. Units (D)(K)
East Haven,
CT(M)
Hollows 184 4/00 (7,917) 3,026,295 0 87,755 7,917 95,672
Apts. Apt. 1/42
Greenville, Units (D)(K)
NC
Elmhurst 313 6/00 (7,884) 7,555,855 0 171,056 7,884 178,940
Village Apts. Apt. 1/42
Oveido, FL Units (D)(K)
Reserve at 212 8/00 (786) 4,982,598 0 67,566 786 68,352
Autumn Crk Apt.
Friends- Units
wood, TX
------------------------------------------------------------------------
Total $865,935 $25,935,027 $28,893,482 $1,319,955 ($131,934) $1,188,021
========================================================================
</TABLE>
-9-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
The operations of Town & Country had not been able to support the payment of
Additional Interest for the period July 1, 1997 through December 31, 1999 which
amounted to $411,911. Accordingly, the accrued interest income that was doubtful
of collection was fully reserved and excluded from interest income from mortgage
loans in previous quarters. On January 21, 2000, the general partner of Town &
Country Estates, Ltd. (the "Town & Country Obligor"), the owner of Town &
Country Apartments, in exchange for the waiving of the prepayment penalty and
future Additional Interest and also because the obligation was secured by its
partnership interest in the obligor, repaid the additional loan and Additional
Interest due through January 21, 2000 in the amounts of $1,039,000 and $421,273,
respectively. As a result, the Additional Interest which had been fully reserved
was deemed to be fully collectible and recorded as interest income in the fourth
quarter of 1999. On March 31, 2000, the Town & Country Obligor fully repaid the
outstanding balance of the FHA insured mortgage loan and accrued Base Interest
in the amounts of $8,934,581 and $53,049, respectively. The Town & Country
Obligor has no further obligations to the Company. The repayment of the FHA
insured mortgage loan and the additional loan resulted in a gain on the
repayment (including a $45,000 loan termination fee due from the Company to the
loan servicing agent and unamortized origination costs) in the amount of
$21,999.
(A) The minimum interest rate shown represents base interest, which is fully
insured by HUD ("Base Interest"). The additional interest rate represents
interest which is not contingent upon cash flow and is secured by partnership
interests in the partnerships which own the Developments ("Additional
Interest").
(B) Additional loans are non-interest bearing.
(C) In addition to the interest rate, the Company was entitled to 30% of the
cash flow remaining after payment of Base Interest and Additional Interest.
(D) The Originated Mortgages have terms of 40 years, subject to mandatory
prepayment at any time after 15 years for the Elmhurst loan and 10 years for the
remaining loans, and upon one year's notice.
(E) The interest rates for Columbiana are 7.9%-8.678% during the permanent loan
period and was 7.4% during the construction period. In addition to the interest
rate during the permanent loan period, the Company is entitled to 25% of the
cash flow remaining after payment of 8.678% interest. The operations of
Columbiana had not been able to support the payment of Additional Interest for
the period October 1, 1997 through June 30, 1998 which amounted to $48,760.
Accordingly, the accrued interest income that was deemed doubtful of collection
was fully reserved and reversed from interest income from mortgage loans in the
fourth quarter of 1998. As a result of the final advance and conversion of the
construction loan to a permanent loan during the second quarter of 1999,
Columbiana was able to repay construction period advances from the developer as
well as Additional Interest due to the Company through the second quarter. As a
result, the Additional Interest which had been fully reserved was recorded as
interest income in the second quarter of 1999.
(F) In addition to the interest rate, the Company is entitled to 40% of the cash
flow remaining after payment of Base and Additional Interest.
-10-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
(G) On January 21, 2000 and March 31, 2000 the additional loan and the FHA
insured mortgage loan, respectively, due to the Company were fully repaid (see
above).
(H) The interest rates for Hollows Apartments are 9.6083% per annum during the
permanent loan period and 7.875% during the construction period. The Note rate
of 7.875% is fully insured by HUD, and secured by a first mortgage deed of
trust. Payments in excess of the Note rate, up to a rate of 9.6083% are secured
by a second mortgage deed of trust and are guaranteed until August 2004 by an
entity related to the general partner of the partnership which owns Hollows
Apartments. The principal balance of the Additional Loan is secured by a third
mortgage deed of trust. In addition to the interest rate during the permanent
loan period, the Company is entitled to 50% of cash flow, if any, remaining
after the payment of debt service and 25% of the sale or refinancing proceeds.
The total loan is comprised of the mortgage loan of $8,946,100 and the
additional loan of $1,549,200. As of September 30, 2000, $1,667,007 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in January, 2042 and have 5-year lockouts against prepayment, as
well as a prepayment penalty structure during the second 5-year period of the
loans.
(I) The interest rates for Elmhurst Village are 9.3232% per annum during the
permanent loan period and 8% during the construction period. The Note rate of 8%
is fully insured by HUD, and secured by a first mortgage deed of trust. Payments
in excess of the Note rate, up to a rate of 9.3232% are secured by a second
mortgage deed of trust and are guaranteed until December 2004 by an entity
related to the general partner of the partnership which owns the Elmhurst
Village Apartments. The principal balance of the Additional Loan is secured by a
third mortgage deed of trust. In addition to the interest rate during the
permanent loan period, the Company is entitled to 50% of cash flow, if any,
remaining after the payment of debt service and 25% of the sale or refinancing
proceeds. The total loan is comprised of the mortgage loan of $21,748,200 and
the additional loan of $2,874,000. As of September 30, 2000, $5,169,911 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in January, 2042 and have 5-year lockouts against prepayment, as
well as a prepayment penalty structure during the second 5-year period of the
loans.
(J) Aggregate cost for federal income tax purposes is $29,766,598.
(K) In order for the Company to exercise an acceleration option it must
terminate the mortgage insurance contract with FHA not later than the
accelerated payment date and, in certain circumstances, must terminate the
mortgage insurance contract upon the exercise of the acceleration option.
Because the exercise of such option would be at the Company's discretion, it is
intended to be exercised only where the value of the underlying property has
increased by an amount which would justify accelerating payment in full and
assuming the risks of foreclosure if the mortgagor failed to make the
accelerated payment.
(L) The interest rates for the Reserve at Autumn Creek are 9.202% during the
permanent loan period and 8% during the construction period. The Note rate of 8%
is fully insured by HUD and secured by a first mortgage deed of trust. Payments
in excess of the Note rate, up to a rate of 9.202% are secured by a second
mortgage deed of trust and are guaranteed until January 2005 by an entity
related to the general partner of the partnership which owns The Reserve at
Autumn Creek. The principal balance of the Additional Loan is secured by a third
mortgage deed of trust. In addition to the interest rate during the permanent
loan period, the Company is entitled to 50% of cash flow, if any, remaining
after the payment of debt service and 25% of
-11-
<PAGE>
the sale or refinancing proceeds. The total loan is compromised of the mortgage
loan of $16,538,700 and the additional loan of $1,987,000. As of September 30,
2000, $2,995,598 of the mortgage loan and the full amount of the additional loan
had been funded. Both loans mature in December 2041 and have 5 year lockouts
against prepayment, as well as a prepayment penalty structure during the second
5 year period of the loans.
(M) The Company contributed the FHA portion of this loan to capitalize AMAC/FM,
an unconsolidated subsidiary. The principal amount contributed was $8,404,092
(See Note 5). The Company retained the additional loan.
(N) Pledged as collateral in connection with a secured credit repurchase
faciliity with Nomura Asset Capital Corporation (See Note 6).
-12-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
Note 3 - Investments in GNMA Certificates-Available for Sale
Information relating to investments in GNMA certificates as of September 30,
2000 and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Date Original Accumulated Loan
Purchased Purchase Principal Discount Amortization Origination
/Final Stated Price at at at Costs at
Certificate Payment Interest Including September September September September
Seller Number Date Rate Discount 30, 2000 30, 2000 30, 2000 30, 2000
------ ------ --------- -------- --------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GNMA Certificates
-----------------
Bear Stearns 0355540 7/27/94 7.125% $2,407,102 $2,523,421 $(233,416) $121,683 $78,069
3/15/29
Malone Mortgage (B) 0382486 7/28/94 8.500% 2,197,130 2,128,815 (7,983) 4,344 72,301
8/15/29
Goldman Sachs 0328502 7/29/94 8.250% 3,928,615 0 0 0 0
7/15/29 (A)
SunCoast Capital Group, Ltd. G22412 6/23/97 7.000% 1,981,566 1,235,614 (8,109) 5,856 0
4/20/27
------------- ----------- ------------ ----------- ----------
Total $10,514,413 $5,887,850 $(249,508) $131,883 $150,370
============= =========== ============ =========== ==========
<CAPTION>
Interest
Unrealized Balance Balance Earned
Loss at at at by the Net
September September December Company 2000 Interest
Seller 30, 2000 30, 2000 31, 1999 for 2000 Accretion Earned
------ --------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
GNMA Certificates
Bear Stearns $(31,588) $2,458,169 $ 2,431,778 $135,319 $14,850 $150,169
Malone Mortgage (B) (41,388) 2,156,089 2,168,686 135,970 530 136,500
Goldman Sachs 0 0 3,565,054 0 13 13
SunCoast Capital Group, Ltd. (22,460) 1,210,901 1,298,919 67,861 1,419 69,280
------------ ----------- ------------ ---------- ---------- ----------
Total $(95,436) $5,825,159 $ 9,464,437 $339,150 $16,812 $355,962
============ =========== ============ ========== ========== ==========
</TABLE>
(A) On January 18, 2000, the Company received the final repayment amounting to
$3,551,736. In addition, a prepayment penalty in the amount of $177,587 was
received on February 8, 2000.
(B) Pledged as collateral in connection with a secured credit repurchase
facility with Nomura Securities International (See Note 6).
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
The amortized cost, unrealized gain and fair value for the investment in GNMA
Certificates at September 30, 2000 and December 31, 1999 were as follows:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Amortized cost $5,920,595 $9,719,376
Gross unrealized loss (95,436) (254,939)
----------- ----------
Fair Value $5,825,159 $9,464,437
========== ==========
</TABLE>
Note 4 - Commercial Mortgage-Backed Security-Related Investment and Short Sale
On September 30, 1999, the Company acquired from ARCap Investors, L.L.C.
("ARCap") a "BB+" rated subordinated commercial mortgage-backed security
("CMBS") from a Chase Manhattan Bank-First Union Nation Bank Commercial Mortgage
Trust (the "Chase-First Union Trust"). The CMBS investment, which was purchased
for $35,622,358, has a face amount of $50,399,711 and an annual coupon rate of
6.4%. In connection with this acquisition, the Company entered into an agreement
(the "Agreement") with ARCap. ARCap acquired from the Chase-First Union Trust
all of the commercial mortgage backed securities that are subordinate to the
CMBS investment (the "Subordinate Bonds") acquired by the Company. Under the
Agreement, the Company has the right to acquire a portion of the Subordinate
Bonds from ARCap and to exchange a portion or all of the CMBS investment and
Subordinate Bonds for a preferred equity interest in ARCap. Furthermore, the
Company has the right to participate on the same terms with ARCap in any
subsequent resecuritization by ARCap of the Chase-First Union Trust bond
issuance. In connection with such resecuritization, ARCap has the right to cause
the Company to choose between three alternative options: (i) to sell the CMBS
investment to ARCap; (ii) to participate with ARCap in the resecuritization; or
(iii) to exchange the CMBS investment for a preferred equity position in ARCap,
all based on the then fair value of the CMBS investment (See Note 10).
Because the Company is required to return the CMBS to ARCap upon request by
ARCap, this transaction has been accounted for as a secured loan from the
Company to ARCap under SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities". This loan can be
contractually settled in such a way that the Company would not recover its
recorded investment, so, under SFAS 125, the Company measures its investment in
the loan like an investment in a debt security. The Company has elected to
utilize the "trading" classification for this investment, and measures the value
of the investment as the estimated value of the CMBS collateralizing the loan,
with changes in the fair value of the investment included in earnings. Deferred
costs relating to the CMBS-related investment are included in the basis of such
investment and are being amortized as a reduction to interest income from the
CMBS-related investment over 7.25 years, which is the estimated term to maturity
of the CMBS-related investment.
-14-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
As of September 30, 2000 the 205 mortgage loans underlying the CMBS were secured
by 217 properties of the types and in the states identified below:
Property Type Percentage (1)
------------- --------------
Multifamily 38%
Retail 29
Office 17
Hospitality 6
Health Care 4
Industrial 4
Other 2
State Percentage (1)
----- --------------
CA 20%
NY 12
FL 6
PA 6
Others (2) 56
(1) Based on a percentage of the total unpaid principal balance of the
underlying loans.
(2) No other state comprises more than 5% of the total.
As of September 30, 2000, there are no unpaid principal balances of loans that
are underlying the CMBS investment which are more than 60 days delinquent.
As of September 30, 2000 the CMBS-related investment had an estimated fair value
of $35,846,794 and an amortized cost of $36,269,009, resulting in an unrealized
loss of $422,215 at that date. The fair value of the Company's CMBS-related
investment is generally estimated by management based on market prices provided
by certain dealers who make a market in these financial instruments. The market
for CMBS periodically suffers from a lack of liquidity. Accordingly, the fair
value reported may not necessarily be indicative of the amount the Company could
realize in a current liquidation of this investment.
At September 30, 2000, the un-leveraged, un-hedged, weighted average yield to
maturity of the Company's CMBS-related investment was approximately 11%.
The yield to maturity on the Company's CMBS-related investment depends on, among
other things, the rate and timing of principal payments, the pass-through rate
and interest rate fluctuations. The subordinated CMBS interest provides credit
support to the more senior interests of the related commercial securitization.
Cash flow from the mortgages underlying the CMBS interest generally is allocated
first to the senior interests, with the most senior interest having a priority
entitlement to cash flow. Remaining cash flow is allocated generally among the
other CMBS interests in order of their relative seniority. To the extent that
there are defaults and unrecoverable losses on the underlying mortgages,
resulting in reduced cash flows, the most subordinate CMBS interest will bear
this loss first. To the extent there are losses in excess of the most
subordinated interest's stated entitlement to principal and interest, then the
remaining CMBS interests will bear such losses in order of their relative
subordination. There is, therefore, no assurance that the yield to maturity
discussed above will be achieved.
-15-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
The Company enters into contracts to sell securities that it does not own at the
time of sale ("short sales"). The Company utilizes these contracts as a means of
mitigating the potential financial statement impact of changes in the fair value
of its CMBS-related investment due to changes in interest rates. The broker
which lends the securities to the Company retains the proceeds from the sale
until the Company replaces the borrowed security. On September 30, 1999, the
Company entered into a Short Sale involving the sale of a U.S. Treasury Note
with a face amount of $39,327,000 and an annual coupon rate of 5.625% borrowed
from Bear Stearns & Co., Inc. ("Bear Stearns") for net proceeds of $39,028,841
(which included accrued interest of $835,565). On March 16, 2000, the Company
replaced the borrowed security by purchasing such security through Bear Stearns
for $37,299,201 resulting in a realized gain of $894,075 and entered into an
additional Short Sale contract involving the sale of a U.S. Treasury Note with a
face amount of $34,512,000 and an annual coupon rate of 6.0% borrowed from Bear
Stearns for net proceeds of $33,717,703 (which included accrued interest of
$176,353). As of September 30, 2000, the U.S. Treasury Note involved in the
March 16, 2000 Short Sale had an estimated fair value of $34,695,845, resulting
in an unrealized loss of $1,153,995 at that date. Both the realized and
unrealized gains are included in "net unrealized loss on commercial
mortgage-backed security-related investment and government security sold short"
in the statements of income. The Company earned $1,498,627 on Short Sale
proceeds held by Bear Stearns ($34,684,560 at September 30, 2000) and incurred
interest of $517,681 and $1,588,840 on its Short Sale contracts during the three
and nine months ended September 30, 2000.
NOTE 5 - Investment in Unconsolidated Subsidiary and Note Receivable
The Company has entered into an agreement with the Federal National Mortgage
Association ("Fannie Mae") whereby the company will provide first loss
protection ("First Loss Obligation") on certain loans originated by Fannie Mae
pursuant to a Master Financing and Loss Sharing Agreement (See Note 9). Through
an unconsolidated subsidiary, AMAC/FM Corporation ("AMAC/FM"), and pursuant to a
Guaranty and Security Agreement with Fannie Mae, the payment of the First Loss
Obligation is guaranteed and secured by AMAC/FM's pledge and grant to Fannie Mae
of a security interest on certain assets of AMAC/FM.
AMAC/FM was capitalized by a contribution by the Company to AMAC/FM of the
mortgage loan secured by Stony Brook Village II Apartments with a principal
amount of $8,404,092. This contribution was recorded by AMAC/FM as a $7,264,093
loan from the Company via a subordinated promissory note, with a stated interest
rate of 7.75% and a $1,140,000 capital contribution through the issuance of
AMAC/FM preferred stock. The Company accounts for its $1,140,000 investment in
AMAC/FM under the equity method of accounting, because all of AMAC/FM's voting
common shares are held by the Advisor and, therefore, the Company does not
control AMAC/FM.
NOTE 6 - Repurchase Facilities and Secured Borrowings
On September 30, 1999, the Company entered into a repurchase facility (the "Bear
Stearns Repurchase Facility") with Bear Stearns, whereby Bear Stearns advanced
$19,568,000 (55% of the purchase price) in cash towards the purchase of a
CMBS-related investment (see Note 4). The Bear Stearns Repurchase Facility has a
variable interest rate based on the one-month LIBOR rate plus 1.5% (8.03% at
September 30, 2000), adjusted on the first day of each month, and terminated on
March 17, 2000. The Bear Stearns Repurchase Facility has been renewed through
October 16, 2000 (See Note 10). The Bear Stearns Repurchase Facility is
collateralized
-16-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
by the Company's CMBS-related investment and contains restrictions based on the
then current market value of such investment as calculated by Bear Stearns. A
decline in the market value of the CMBS could result in cash flow from such
investment being diverted to reduce the outstanding borrowing, the requirement
to post additional collateral, or the sale of such investment.
Effective February 15, 2000, the Company entered into a $60 million FHA
repurchase facility (the "Nomura Repurchase Facility") with Nomura Asset Capital
Corporation. This agreement enables the Company to borrow up to 90% with a
qualified hedge or 80% without a qualified hedge of the fair market value of FHA
loans owned by the Company. The Nomura Repurchase Facility has a term of 364
days and bears interest at LIBOR plus 1.25%. As of September 30, 2000, the
amount outstanding under this facility was $6,749,081, and the interest rate was
7.87%. Deferred costs of $79,815 relating to the Nomura Repurchase Facility are
being amortized using the straight-line method over 364 days, which is the term
of the facility.
Effective February 15, 2000, the Company entered into a repurchase facility with
Nomura Securities International, Inc. (the "Nomura Securities Repurchase
Facility"). This agreement enables the Company to borrow up to 95% of the fair
market value of qualified mortgage securities owned by the Company. Borrowings
bear interest at LIBOR plus 0.50%. As of September 30, 2000, the amount
outstanding under this facility was $2,045,000, and the interest rate was 7.12%.
Deferred costs of $79,815 relating to the Nomura Securities Repurchase Facility
are being amortized using the straight-line method over five years.
NOTE 7 - Related Party Transactions
Prior to the adoption of the Proposals, the Company had an agreement with the
Advisor pursuant to which the Advisor received compensation consisting primarily
of (i) asset management fees calculated as .625% of total assets invested by the
Company; (ii) a subordinated incentive fee based on the economic gain on the
sale of Mortgage Investments; (iii) reimbursement of certain administrative and
other costs incurred by the Advisor on behalf of the Company; and (iv) certain
other fees. In addition, with respect to Mortgage Loans acquired by the Company,
the Advisor was entitled to receive loan placement fees paid by borrowers equal
to up to 1.5% of the principal amount of each mortgage loan.
As a result of the adoption of the Proposals, the Board of Trustees amended the
Advisory Agreement between the Company and the Advisor to, among other matters,
reflect the Proposals and change the Advisory Agreement's fee structure to (a)
eliminate the acquisition and disposition fees currently payable to the Advisor;
(b) modify the annual asset management fee payable to the Advisor as set forth
below; and (c) include an annual incentive fee payable to the Advisor as also
set forth below. The modified annual asset management fee is calculated as
follows: (i) .355% for investments in Mortgage Loans; (ii) .355% for certain
investment grade investments; (iii) .750% for certain non-investment grade
investments; (iv) 1.000% for unrated investments; and (v) .625% for investments
held prior to the adoption of the Proposals. The annual incentive fee is
calculated as follows: subject to a minimum annual distribution being made to
shareholders from cash available for distribution of approximately $1.45 per
Share, the Advisor will be entitled to receive incentive compensation for each
fiscal year in an amount equal to the product of (A) 25% of the dollar amount by
which (1)(a) Funds From Operations of the Company (as defined, and before the
incentive fee) per Share (based on the weighted average number of Shares
outstanding) plus (b) gains (or minus losses) from debt restructuring and sales
of property per Share (based on the weighted average number of Shares
outstand-
-17-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
ing), exceed (2) an amount equal to (a) the weighted average of the price per
Share of the initial offering (i.e., $20 per Share) and the prices per Share of
any secondary offerings by the Company multiplied by (b) the ten-year U.S.
Treasury rate plus two percent per annum multiplied by (B) the weighted average
number of Shares outstanding during such fiscal year. For any period less than a
fiscal year during which the amended Advisory Agreement is in effect, the
incentive fee will be prorated according to the proportion which such period
bears to a full fiscal year, taking into account, however, the Company's cash
available for distribution for the entire fiscal year.
In addition, the Advisory Agreement's fee structure was also changed so that
with respect to the first $100 million of new Mortgage Loans acquired by the
Company, the Advisor will receive origination points paid by borrowers equal to
up to 1% of the principal amount of each Mortgage Loan, and the Company will
receive origination points paid by the borrowers in excess of 1%. After the
first $100 million of additional Mortgage Loans is acquired, the Company will
retain 100% of the origination points paid by borrowers. During the nine months
ended September 30, 2000, the Advisor and the Company each received origination
points of $52,477, $123,111 and $71,995 on the Hollows, Elmhurst and Autumn
Creek loans. The points received by the Company are being amortized through the
mandatory prepayment dates of each loan. (See Note 2)
The costs incurred to related parties for the three and nine months ended
September 30, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Expense reimburse-
ment $102,130 $ 76,028 $291,103 $152,521
Asset management fees 120,733 63,485 350,835 205,588
Incentive management
fee 0 (18,522) 0 81,139
-------- -------- -------- --------
$222,863 $120,991 $641,938 $439,248
======== ======== ======== ========
</TABLE>
Note 8 - Earnings Per Share
Basic net income per share in the amount $.32 and $.18 and $.62 and $1.35 for
the three and nine months ended September 30, 2000 and 1999, respectively,
equals net income for the periods ($1,222,735 and $697,089 and $2,376,920 and
$5,186,698, respectively), divided by the weighted average number of shares
outstanding for the periods (3,838,630 and 3,838,630 and 3,838,630 and
3,843,044, respectively).
Because the Company had no dilutive securities outstanding at September 30, 2000
or 1999, diluted net income per share is the same as basic net income per share.
Note 9 - Commitments and Contingencies
The Company has completed a loan venture with Fannie Mae which has agreed to
fully fund the origination of $250 million of Delegated Underwriter and Servicer
loans for apartment
-18-
<PAGE>
AMERICAN MORTGAGE ACCEPTANCE COMPANY
Notes to Financial Statements
September 30, 2000
(Unaudited)
properties that qualify for low income housing tax credits under Section 42 of
the Internal Revenue Code. Under the transaction, the Company will originate and
contract for individual loans of up to $6 million dollars each over a two-year
period and will work with American Property Financing, which will underwrite and
service the loans for Fannie Mae. Each property in the transaction will benefit
from 9% low income housing tax credits for no less than 90% of its units. The
Company will guaranty a first loss position of up to 10% of the pool of $250
million and will receive guaranty and other fees (See Note 5). Through
September 30, 2000, three loans totaling $3,807,000 were originated under the
loan venture. Subsequent to September 30, 2000, a fourth loan was originated in
the amount of $1,137,000.
Note 10 - Subsequent Events
On November 1, 2000, the Company, in accordance with the Agreement (See Note 4),
transferred the CMBS investment to ARCap, terminated the Short Sale, repaid the
Bear Stearns Repurchase Facility and received a preferred equity interest in
ARCap. The preferred equity interest has a face amount of $20,000,000 and a
preferred dividend rate of 12%.
The CMBS investment and the Short Sale were marked to market at the date of
the transaction, resulting in a net gain of approximately $424,000 recorded
in the fourth quarter. The preferred equity interest in ARCap was recorded at
fair value of the CMBS at the transaction date, less the repayment of the
Bear Stearns Repurchase Facility and plus approximately $3,550,000 of cash
contributed to ARCap, resulting in a carrying value of approximately
$17,030,000. The preferred equity interest will be carried at cost subject to
an impairment test.
-19-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
LIQUIDITY AND CAPITAL RESOURCES
American Mortgage Acceptance Company (formerly American Mortgage Investors
Trust) (the "Company") was formed on June 11, 1991 as a Massachusetts business
trust for the primary purpose of investing in government-insured mortgages and
guaranteed mortgage-backed certificates. The Company elected to be treated as a
real estate investment trust ("REIT") under the Internal Revenue Code of 1986,
as amended (the "Code").
On April 6, 1999, the Company received the necessary consent from its
shareholders to approve proposals (the "Proposals") to, among other things,
restructure the Company from a closed-ended, finite-life REIT to a publicly
traded, open-ended, infinite-life operating REIT. In addition to restructuring
the Company, the Proposals, among other matters, permit the Company to modify
its investment objectives, to incur a specified amount of indebtedness and to
list the Company's shares on a national exchange.
Effective April 26, 1999, upon authorization by the Board of Trustees, the
Company's name was changed from American Mortgage Investors Trust to American
Mortgage Acceptance Company. The Company's shares of beneficial interest (the
"Shares") commenced trading on the American Stock Exchange on July 1, 1999 under
the symbol "AMC".
The Company's new business plan as a publicly traded REIT focuses on three types
of mortgage products: 1) origination of participating FHA insured multifamily
mortgages, 2) origination of construction and permanent mortgage financing for
affordable multifamily housing pursuant to a new venture with Federal National
Mortgage Association ("Fannie Mae"), and 3) acquisition of subordinated
interests in commercial mortgage-backed securities.
As of September 30, 2000, the Company's mortgage investments consisted of five
mortgage loans originated by or on behalf of the Company, four GNMA
mortgage-backed securities and pass-through certificates and one commercial
mortgage-backed security ("CMBS")-related investment.
The current composition of the Company's investment portfolio reflects the
recent change in the Company's business plan and is not comparable to its
investment portfolio prior to April 1999. Furthermore, the Company is still in
the process of implementing its new business plan and, therefore, the current
portfolio should not be considered indicative of the composition of the
portfolio that might be expected in the future.
During the nine months ended September 30, 2000, cash and cash equivalents
increased approximately $5,321,000 primarily due to cash provided by operating
activities ($1,953,000), principal repayments of mortgage loans and GNMA
Certificates ($3,874,000) and proceeds from a repurchase facility payable
($2,056,000) which exceeded a net increase in investments in mortgage loans
($5,504,000), distributions paid to shareholders ($4,175,000), repayments of the
repurchase facility payable ($1,122,000), and an increase in deferred loan costs
($160,000). Included in the adjustments to reconcile the net income to cash
provided by operating activities is a gain on repayment of mortgage loans
($14,000), a gain on repayments of GNMA certificates ($58,000), a gain on
commercial mortgage-backed, security-related investment ($997,000), a loss on
government securities sold short ($1,461,000) and net accretion ($489,000).
Net unrealized losses on GNMA investments included in shareholders' equity
pursuant to Statement of Financial Accounting Standards No. 115 aggregated
$95,436 at September 30, 2000. This represents a decrease of $159,503 in the
unrealized loss for the nine months ended
-20-
<PAGE>
September 30, 2000, of which a decrease of $110,677 is attributable to the
repayments of GNMA investments (which resulted in a net realized gain of
$(58,409) and an increase of $(48,826) is attributable to an increase in market
prices for GNMA investments held at both September 30, 2000 and December 31,
1999. On January 18, 2000, one of the Company's GNMA certificates in the
original amount of $3,928,615 (including the discount), with an amortized cost
basis of $3,671,107 at December 31, 1999, was repaid in the amount of $3,551,736
along with a prepayment penalty of $177,587 which was received in February 2000.
This repayment (including the prepayment penalty) resulted in a realized gain in
the amount of $58,202.
The yield on the GNMA Certificates will depend, in part, upon the rate and
timing of principal prepayments on the underlying mortgages in the asset pool.
Generally, as market interest rates decrease, mortgage prepayment rates increase
and the market value of interest rate sensitive obligations like the GNMA
Certificates increases. As market interest rates increase, mortgage prepayment
rates tend to decrease and the market value of interest rate sensitive
obligations like the GNMAs tends to decrease. The effect of prepayments on yield
is greater the earlier a prepayment of principal is received.
The operations of Town & Country had not been able to support the payment of
Additional Interest on the mortgage loan for the period July 1, 1997 through
December 31, 1999 which amounted to $411,911. Accordingly, the accrued interest
income that was doubtful of collection was fully reserved and excluded from
interest income from mortgage loans in previous quarters. On January 21, 2000,
the general partner of Town & Country Estates, Ltd. (the "Town & Country
Obligor"), the owner of Town & Country Apartments, in exchange for the waiving
of the prepayment penalty and future Additional Interest and also because the
obligation was secured by its partnership interest in the obligor, repaid the
additional loan and Additional Interest due through January 21, 2000 in the
amounts of $1,039,000 and $421,273, respectively. As a result, the Additional
Interest which had been fully reserved was deemed to be fully collectible and
recorded as interest income in the fourth quarter of 1999. On March 31, 2000,
the Town & Country Obligor fully repaid the outstanding balance of the FHA
insured mortgage loan and accrued Base Interest in the amounts of $8,934,581 and
$53,049, respectively. The Town & Country Obligor has no further obligations to
the Company. The repayment of the FHA insured mortgage loan and the additional
loan resulted in a gain on the repayment (including a $45,000 loan termination
fee due from the Company to the loan servicing agent and unamortized origination
costs) in the amount of $21,999.
The yield on the mortgage loans will depend, in part, on when, and if, the
Company disposes of the mortgage loans prior to maturity or the obligor fully
repays the outstanding debt. The mortgage loans have fixed interest rates, the
base amount of which is insured by HUD, resulting in a minimal amount of
interest rate risk. The effects of prepayment on yield is greater the earlier a
prepayment of principal is received. Due to the uncertainty of future economic
and other factors that affect interest rates and mortgage prepayments, it is not
possible to predict the effects of future events upon the yield to maturity or
the market value of the mortgage loans upon any sale or other disposition or
whether the Company, if it chose to, would be able to reinvest proceeds from
prepayments at favorable rates relative to the current mortgage loan rates. As
described below, two mortgage loans were repaid and the Company is still in the
process of reinvesting the proceeds of such repaid mortgage loans.
On September 30, 1999, the Company acquired from ARCap Investors, L.L.C.
("ARCap") a "BB+" rated subordinated commercial mortgage-backed security
("CMBS") from a Chase Manhattan Bank-First Union Nation Bank Commercial Mortgage
Trust (the "Chase-First Union Trust"). The CMBS investment, which was purchased
for $35,622,358, has a face amount of $50,399,711 and an annual coupon rate of
6.4%. The Company purchased the CMBS investment using cash and debt provided
through a repurchase facility. In connection with this
-21-
<PAGE>
acquisition, the Company entered into an agreement (the "Agreement") with ARCap.
ARCap acquired from the Chase-First Union Trust all of the commercial mortgage
backed securities that are subordinate to the CMBS investment (the "Subordinate
Bonds") acquired by the Company. Under the Agreement, the Company has the right
to acquire a portion of the Subordinate Bonds from ARCap and to exchange a
portion or all of the CMBS investment and Subordinate Bonds for a preferred
equity interest in ARCap. Furthermore, the Company has the right to participate
on the same terms with ARCap in any subsequent resecuritization by ARCap of the
Chase-First Union Trust bond issuance. In connection with such resecuritization,
ARCap has the right to cause the Company to choose between three alternative
options: (i) to sell the CMBS investment to ARCap; (ii) to participate with
ARCap in the resecuritization; or (iii) to exchange the CMBS investment for a
preferred equity position in ARCap, all based on the then fair value of the CMBS
investment. As of September 30, 2000 the CMBS-related investment had an
estimated fair value of $35,846,794 and an amortized cost of $36,269,009,
resulting in an unrealized loss of $422,215 at that date which is included in
"net unrealized losses on commercial mortgage-backed security-related investment
and government security sold short" in the statements of income. The fair value
of the Company's CMBS-related investment is generally estimated by management
based on market prices provided by certain dealers who make a market in these
financial instruments. The market for CMBS periodically suffers from a lack of
liquidity. Accordingly, the fair value reported may not necessarily be
indicative of the amount the Company could realize in a current liquidation of
this investment.
The yield to maturity on the Company's CMBS-related investment depends on, among
other things, the rate and timing of principal payments, the pass-through rate
and interest rate fluctuations. The subordinated CMBS interest provides credit
support to the more senior interests of the related commercial securitization.
Cash flow from the mortgages underlying the CMBS interest generally is allocated
first to the senior interests, with the most senior interest having a priority
entitlement to cash flow. Remaining cash flow is allocated generally among the
other CMBS interests in order of their relative seniority. To the extent that
there are defaults and unrecoverable losses on the underlying mortgages,
resulting in reduced cash flows, the most subordinate CMBS interest will bear
this loss first. To the extent there are losses in excess of the most
subordinated interest's stated entitlement to principal and interest, then the
remaining CMBS interests will bear such losses in order of their relative
subordination.
The Company enters into contracts to sell securities that it does not own at the
time of sale ("short sales"). The Company utilizes these contracts as a means of
mitigating the potential financial statement impact of changes in the fair value
of its CMBS-related investment due to changes in interest rates. The broker
which lends the securities to the Company retains the proceeds from the sale
until the Company replaces the borrowed security. On September 30, 1999, the
Company entered into a Short Sale involving the sale of a U.S. Treasury Note
with a face amount of $39,327,000 and an annual coupon rate of 5.625% borrowed
from Bear Stearns & Co., Inc. ("Bear Stearns") for net proceeds of $39,028,841
(which included accrued interest of $835,565). On March 16, 2000, the Company
replaced the borrowed security by purchasing such security through Bear Stearns
for $37,299,201 resulting in a realized gain of $894,075 and entered into an
additional Short Sale contract involving the sale of a U.S. Treasury Note with a
face amount of $34,512,000 and an annual coupon rate of 6.0% borrowed from Bear
Stearns for net proceeds of $33,717,703 (which included accrued interest of
$176,353). As of September 30, 2000, the U.S. Treasury Note involved in the
March 16, 2000 Short Sale had an estimated fair value of $34,695,345, resulting
in an unrealized loss of $1,153,995 at that date which is included in "net
unrealized loss on commercial mortgage-backed security-related investment and
government security sold short" in the statements of income. The Company earned
$1,498,627 on Short Sale proceeds held by Bear Stearns ($34,684,560 at September
30, 2000) and incurred interest of $517,681 and $1,588,840 on its Short Sale
contracts during the three and nine months ended September 30, 2000.
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<PAGE>
On September 30, 1999, the Company entered into a repurchase facility (the "Bear
Stearns Repurchase Facility") with Bear Stearns, whereby Bear Stearns advanced
$19,568,000 (55% of the purchase price) in cash towards the purchase of a
CMBS-related investment (see above). The Bear Stearns Repurchase Facility had a
variable interest rate based on the one-month LIBOR rate plus 1.5% (8.03% of
September 30, 2000), which was adjusted on the first day of each month, and
terminated on March 17, 2000. The Bear Stearns Repurchase Facility has been
renewed through October 16, 2000. The Bear Stearns Repurchase Facility is
collateralized by the Company's CMBS-related investment and contains
restrictions based on the then current market value of such investment as
calculated by Bear Stearns. A decline in the market value of the CMBS could
result in cash flow from such investment being diverted to reduce the
outstanding borrowing, the requirement to post additional collateral, or the
sale of such investment. The outstanding balance of the Bear Stearns Repurchase
Facility (based on 55% of the market of the CMBS at June 15, 2000) was
$19,624,000 at September 30, 2000. The Repurchase Facility currently represents
the Company's sole source of liquidity needed to finance its long-term
CMBS-related investment. If the lender fails to renew the Repurchase Facility,
the Company will be required to seek new financing or may have to liquidate the
CMBS or other investments.
On November 1, 2000, the Company, in accordance with the Agreement (See Note 4),
transferred the CMBS investment to ARCap, terminated the Short Sale, repaid the
Bear Stearns Repurchase Facility and received a preferred equity interest in
ARCap. The preferred equity interest has a face amount of $20,000,000 and a
preferred dividend rate of 12%.
Effective February 15, 2000, the Company entered into a $60 million FHA
repurchase facility (the "Nomura Repurchase Facility") with Nomura Asset Capital
Corporation. This agreement enables the Company to borrow up to 90% with a
qualified hedge, or 80% without a qualified hedge, of the fair market value of
FHA loans owned by the Company. The Nomura Master Repurchase Facility has a term
of 364 days and bears interest at LIBOR plus 1.25%. On August 2, 2000, the
Company borrowed $6,755,739 under the Nomura Repurchase Facility.
Effective February 15, 2000, the Company entered into a repurchase facility with
Nomura Securities International, Inc. (the "Nomura Securities Repurchase
Facility"). This agreement enables the Company to borrow up to 95% of the fair
market value of qualified mortgage securities owned by the Company and bears
interest at LIBOR plus 0.50%. On July 28, 2000, the Company borrowed $2,045,000
under the Nomura Securities Repurchase Facility.
In order to qualify as a REIT under the Code, the Company must, among other
things, distribute at least 95% of its taxable income. The Company believes that
it is in compliance with the REIT-related provisions of the Code.
The Company expects that cash generated from the Company's investments will meet
its needs for short-term liquidity, and will be sufficient to pay all of the
Company's expenses and to make distributions to its shareholders in amounts
sufficient to retain the Company's REIT status in the foreseeable future.
During the nine months ended September 30, 2000, the Company acquired three
mortgage loans as follows:
On April 18, 2000, the Company acquired a 100% participation interest in an
FHA-insured first mortgage loan and an additional loan, secured by Hollows
Apartments, a multifamily market-rate housing apartment complex located in North
Carolina. The interest rates for Hollows Apartments are 9.6083% per annum during
the permanent loan period and 7.875% during the construction period. The Note
rate of 7.875% is fully insured by HUD, and secured by a first mortgage deed of
trust. Payments in excess of the Note rate, up to a rate of 9.6083% are se-
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<PAGE>
cured by a second mortgage deed of trust and are guaranteed until August 2004 by
an entity related to the general partner of the partnership which owns Hollows
Apartments. The principal balance of the Additional Loan is secured by a
non-interest bearing third mortgage deed of trust. In addition to the interest
rate during the permanent loan period, the Company is entitled to 50% of cash
flow, if any, remaining after the payment of debt service and 25% of the sale or
refinancing proceeds. The total loan is comprised of the mortgage loan of
$8,946,100 and the additional loan of $1,549,200. As of September 30, 2000,
$1,667,007 of the mortgage loan and the full amount of the additional loan had
been funded. Both loans mature in January, 2042 and have 5-year lockouts against
prepayment, as well as a prepayment penalty structure during the second 5-year
period of the loans.
On June 28, 2000 the Company acquired a 100% participation interest in an
FHA-insured first mortgage loan and an additional loan, secured by Elmhurst
Village Apartments, a multifamily market-rate housing apartment complex located
in Florida. The interest rates for Elmhurst Village are 9.3232% per annum during
the permanent loan period and 8% during the construction period. The Note rate
of 8% is fully insured by HUD, and secured by a first mortgage deed of trust.
Payments in excess of the Note rate, up to a rate of 9.3232% are secured by a
second mortgage deed of trust and are guaranteed until December 2004 by an
entity related to the general partner of the partnership which owns the Elmhurst
Village Apartments. The principal balance of the Additional Loan is secured by a
non-interest bearing third mortgage deed of trust. In addition to the interest
rate during the permanent loan period, the Company is entitled to 50% of cash
flow, if any, remaining after the payment of debt service and 25% of the sale or
refinancing proceeds. The total loan is comprised of the mortgage loan of
$21,748,200 and the additional loan of $2,874,000. As of September 30, 2000,
$5,169,911 of the mortgage loan and the full amount of the additional loan had
been funded. Both loans mature in January, 2042 and have 5-year lockouts against
prepayment, as well as a prepayment penalty structure during the second 5-year
period of the loans.
On August 3, 2000, the Company acquired 100% participation interest in an FHA
insured first mortgage loan and an additional loan, secured by The Reserve at
Autumn Creek, a multifamily market-rate housing apartment complex located in
Texas. The interest rates for the Reserve at Autumn Creek are 9.202% during the
permanent loan period and 8% during the construction period. The Note rate of 8%
is fully insured by HUD and secured by a first mortgage deed of trust. Payments
in excess of the Note rate, up to a rate of 9.202% are secured by a second
mortgage deed of trust and are guaranteed until January 2005 by an entity
related to the general partner of the partnership which owns The Reserve at
Autumn Creek. The principal balance of the Additional Loan is secured by a third
mortgage deed of trust. In addition to the interest rate during the permanent
loan period, the Company is entitled to 50% of cash flow, if any, remaining
after the payment of debt service and 25% of the sale or refinancing proceeds.
The total loan is compromised of the mortgage loan of $16,538,700 and the
additional loan of $1,987,000. As of September 30, 2000, $2,995,598 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in and have 5 year lockouts against prepayment, as well as, a
prepayment penalty structure during the second 5 year period of the loans.
The Company completed a loan venture with Fannie Mae which has agreed to fully
fund the origination of $250 million of Delegated Underwriter and Servicer loans
for apartment properties that qualify for low income housing tax credits under
Section 42 of the Internal Revenue Code. Under the transaction, the Company will
originate and contract for individual loans of up to $6 million dollars each
over a two-year period and will work with American Property Financing, which
will underwrite and service the loans for Fannie Mae. Each property in the
transaction will benefit from 9% low income housing tax credits for no less than
90% of its units. The Company will guaranty a first loss position of up to 10%
of the pool of $250 million
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<PAGE>
and will receive guaranty and other fees. Two loans totaling $3,465,000 were
originated under the loan venture in June, 2000.
Management is not aware of any trends or events, commitments or uncertainties,
which have not otherwise been disclosed that will or are likely to impact
liquidity in a material way.
RESULTS OF OPERATIONS
The net income for the three and nine months ended September 30, 2000 and 1999
was $1,243,277 and $697,089 and $2,376,920 and $5,186,698, respectively. The
total of the annual operating expenses of the Company may not exceed the greater
of (i) 2% of the Average Invested Assets of the Company or (ii) 25% of the
Company's net income, unless such excess is approved by the Independent
Trustees. On an annualized basis, there was no such excess for the nine months
ended September 30, 2000 and 1999.
Interest income from mortgage loans increased and decreased approximately
$34,000 and $297,000 for the three and nine months ended September 30, 2000 as
compared to 1999 primarily due to interest income from Columbiana, new loans
funded during 2000 and the transfer of one loan to AMAC/FM.
Interest income from GNMA certificates decreased approximately $78,000 and
$236,000 for the three and nine months ended September 30, 2000 as compared to
1999 primarily due to the repayment, in full, of one of the GNMA certificates on
January 18, 2000.
Interest income from commercial mortgage-backed security-related investment in
the amount of approximately $960,000 and $2,868,000 was recorded for the three
and nine months ended September 30, 2000; such investment was made on September
30, 1999.
Interest income from temporary investments increased approximately $403,000 and
$1,265,000 for the three and nine months ended September 30, 2000 as compared to
1999 primarily due to interest on Short Sale proceeds held by Bear Stearns in
2000 as collateral for securities sold short.
Interest expense in the amount of approximately $1,044,000 and $2,857,000 was
recorded for the three and nine months ended September 30, 2000 relating to
interest on the Bear Stearns Repurchase Facility entered into on September 30,
1999 and interest on a government securities sold short on September 30, 1999
and March 16, 2000.
General and administrative expenses increased approximately $175,000 and
$329,000 for the three and nine months ended September 30, 2000 as compared to
1999. The increase for the nine months ended September 30, 2000 as compared to
1999 was primarily due to an increase in asset management fees payable to the
Advisor due to the commercial mortgage-backed security-related investment made
on September 30, 1999.
Amortization in the amount of approximately $26,000 and $60,000 was recorded for
the three and nine months ended September 30, 2000 due to amortization of
deferred costs relating to the Nomura Repurchase Facility.
A net gain (loss) on the commercial mortgage-backed security-related investment
and government securities sold short in the amounts of approximately $246,000
and $(464,000) was recorded for the three and nine months ended September 30,
2000 relating to a commercial mortgage-backed security-related investment made
on September 30, 1999 and securities sold short on September 30, 1999 and March
16, 2000.
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<PAGE>
Gains on repayment of mortgage loans in the amounts of approximately $72,000 and
$3,272,000 were recorded for the nine months ended September 30, 2000 and 1999,
respectively, relating to the repayment of the Town & Country additional loan
and FHA insured mortgage loan on January 21, 2000 and March 31, 2000,
respectively and the repayment of the Cove and Oxford FHA insured mortgage loans
and additional loans on March 1, 1999.
DISTRIBUTIONS
Of the total distributions of $4,174,512 and $5,555,241 for the nine months
ended September 30, 2000 and 1999, respectively, $1,836,883 ($.48 per share or
44%) and $0, respectively, represented a return of capital determined in
accordance with generally accepted accounting principles. As of September 30,
2000, the aggregate amount of the distributions made since the commencement of
the initial public offering representing a return of capital, in accordance with
generally accepted accounting principles, totaled $13,706,351. The portion of
the distributions which constituted a return of capital was significant during
the initial acquisition stage in order to maintain level distributions to
shareholders.
FORWARD-LOOKING STATEMENTS
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include statements regarding the intent, belief or
current expectations of the Company and its management and involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following: general economic and business conditions, which will, among other
things, affect the availability and creditworthiness of prospective tenants,
lease rents and the terms and availability of financing; adverse changes in the
real estate markets including, among other things, competition with other
companies; risks of real estate development and acquisition; governmental
actions and initiatives; and environment/safety requirements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof.
INFLATION
Inflation did not have a material effect on the Company's results for the
periods presented.
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<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in interest rates,
changes in spreads on CMBS, foreign currency exchange rates, commodity prices
and equity prices. The primary market risks to which the investments of the
Company are exposed are interest rate risk and CMBS spread risk, which are
highly sensitive to many factors, including governmental monetary and tax
policies, domestic and international economic and political considerations and
other factors beyond the control of the Company.
Changes in the general level of interest rates can affect the net interest
income of the Company. The following table demonstrates the estimated effect, at
September 30, 2000, that changes in interest rates would have on the annual net
interest income from, and the valuation of the Company's CMBS-related investment
and short positions in government securities. All changes in income and
valuation are measured as percentage changes from the projected income and
valuation if no change in interest rates were to occur.
CHANGE IN EXPECTED ANNUAL INCOME FROM THE CMBS-RELATED INVESTMENT
AND SHORT POSITIONS FROM CHANGES IN INTEREST RATES
<TABLE>
<CAPTION>
Change in Income *
------------------------------
Change in Interest Rates Amount Percentage
------------------------ -------- ----------
<S> <C> <C>
-250 Basis Points $356,178 9.2%
-200 Basis Points 284,943 7.4%
-150 Basis Points 213,707 5.5%
-100 Basis Points 142,471 3.7%
-50 Basis Points 71,236 1.8%
No Change 0 0.0%
+50 Basis Points (71,236) -1.8%
+100 Basis Points (142,471) -3.7%
+150 Basis Points (213,707) -5.5%
+200 Basis Points (284,943) -7.4%
+250 Basis Points (356,178) -9.2%
</TABLE>
* Income includes expected interest income from the CMBS-related investment,
amortization of market discount on CMBS, net interest expense on short positions
in government securities and mark to market adjustments to the CMBS-related
investment and government securities from changes in interest rates.
The Company is further exposed to interest rate risk through its short term
financing through repurchase agreements at rates that are based on 30-day LIBOR.
Changes in interest rates may increase the Company's cost of financing its
investments. The following table demonstrates the estimated effect, at September
30, 2000, that changes in interest rates would have on the annual interest
expense of the Company.
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<PAGE>
CHANGE IN ANNUAL INTEREST EXPENSE UNDER REPURCHASE AGREEMENTS FROM
CHANGES IN LIBOR
<TABLE>
<CAPTION>
Change in Interest Expense
-------------------------------
Change in LIBOR Amount Percentage
--------------- --------- ----------
<S> <C> <C>
-250 Basis Points $(721,377) -32%
-200 Basis Points (577,102) -25%
-150 Basis Points (432,826) -19%
-100 Basis Points (288,551) -13%
-50 Basis Points (144,275) -6%
No change in LIBOR 0 0%
+50 Basis Points 144,275 6%
+100 Basis Points 288,551 13%
+150 Basis Points 432,826 19%
+200 Basis Points 577,102 25%
+250 Basis Points 721,377 32%
</TABLE>
The investments of the Company are also exposed to spread risk. The price of a
fixed income security is generally determined by adding an interest rate spread
to a benchmark interest rate, such as the U.S. Treasury rate. As the spread on a
security widens (or increases), the price (or value) of the security falls. As
spreads on CMBS widen, the fair value of the Company's investment falls. Spread
widening in the market for CMBS can occur as a result of market concerns over
the stability of the commercial real estate market, excess supply of CMBS, or
general credit concerns in other markets. The following table demonstrates the
estimated effect that changes in CMBS spreads would have on the value of the
Company's CMBS-related investment at September 30, 2000:
CHANGE IN VALUE OF CMBS-RELATED INVESTMENT FROM CHANGES IN CMBS
SPREADS
<TABLE>
<CAPTION>
Change in CMBS Value
---------------------------------
Change in CMBS Spreads Amount Percentage
---------------------- ---------- ----------
<S> <C> <C>
-250 Basis Points $6,335,921 17.7%
-200 Basis Points 5,068,737 14.1%
-150 Basis Points 3,801,553 10.6%
-100 Basis Points 2,534,368 7.1%
-50 Basis Points 1,267,184 3.5%
No change in CMBS Spreads 0 0.0%
+50 Basis Points (1,267,184) -3.5%
+100 Basis Points (2,534,368) -7.1%
+150 Basis Points (3,801,553) -10.6%
+200 Basis Points (5,068,737) -14.1%
+250 Basis Points (6,335,921) -17.7%
</TABLE>
The above tables show the possible impact of changes in interest rates and CMBS
spreads on the Company's CMBS-related investment, the financing related to that
investment, and the associated hedging instruments. Cash flows and income from
the Company's other financial instruments, consisting primarily of mortgage
loans, GNMA certificates, and cash and cash equivalents, would not be
significantly affected by changes in interest rates, because most of
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<PAGE>
these instruments bear interest at fixed rates, and are not subject to financing
or hedged. Cash and cash equivalents and the mortgage loans are carried at
amortized cost, and so their carrying values are not impacted by changes in
interest rates. The GNMA investments are adjusted to market value through
comprehensive income in the equity statement, but changes in their value have
not historically been significant to shareholders' equity.
The Company's analysis of risks is based on management's experience, estimates
and assumptions. These analyses rely on financial models, which utilize
estimates of fair value and interest rate sensitivity. Actual economic
conditions or implementation of investment decisions by management may produce
results significantly different from the projected results shown in the above
tables.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any material pending legal proceedings.
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information
John B. Roche ceased to serve as Chief Financial Officer effective
May 15, 2000. Alan P. Hirmes was appointed interim Chief Financial
Officer effective May 15, 2000. Michael I. Wirth was appointed to the
position of Chief financial Officer and replaced Alan P. Hirmes
effective August 16, 2000
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
27 Financial Data Schedule (filed herewith).
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during this quarter.
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<PAGE>
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.
AMERICAN MORTGAGE ACCEPTANCE COMPANY
(Registrant)
Date: November 13, 2000 By: /s/ Stuart J. Boesky
-------------------------------------------
Stuart J. Boesky
Trustee, Chairman of the Board,
President and Chief Executive Officer
Date: November 13, 2000 By: /s/ Michael I. Wirth
-------------------------------------------
Michael I. Wirth
Chief Financial Officer
