NEWPORT BEACH, Calif., April 30, 2001 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period January 1, 2001, through March 31, 2001 (first quarter).
PIMCO Commercial Mortgage Securities Trust, Inc. (the "Fund") is a closed-end bond fund that invests principally in investment grade commercial mortgage-backed securities ("CMBS"). The primary investment objective of the Fund is to achieve high current income, with capital gain from the disposition of investments as a secondary objective. Pacific Investment Management Company LLC ("PIMCO"), an investment adviser with more than $219.7 billion of assets under management as of March 31, 2001, is responsible for managing the Fund's investment portfolio.
Total Return Investment Performance
Periods Ended Based on Based on
03/31/01 NYSE Share Price Net Asset Value
-------- ---------------- ---------------
First quarter 9.39% 4.32%
One year 20.83% 13.48%
Three years (annualized) 9.16% 7.55%
Five years (annualized) 11.26% 9.22%
The Fund's total return investment performance is net of all fees and expenses and assumes the reinvestment of dividends. For comparison purposes, the Lehman Brothers Aggregate Bond Index, a broad market measure of domestic fixed income performance, rose 3.04%, 12.53%, 6.88% and 7.48% for the three months, one year, three years and five years ended March 31, 2001, respectively (3 and 5 year numbers are annualized).
Price Information
Pricing Date NYSE Share Price Net Asset Value
------------ ---------------- ---------------
March 31, 2001 $13.4500 $13.13
December 31, 2000 $12.5625 $12.86
March 31, 2000 $12.3750 $12.81
Premium/(Discount) to Net Asset Value
-------------------------------------
March 31, 2001 2.44%
December 31, 2000 (2.31)%
March 31, 2000 (3.40)%
Dividend Information
--------------------
Regular monthly dividend per share: $ 0.09375
Total dividends declared in the quarter: $ 0.28125
Annualized dividend yield at 03/31/01
based on NYSE share price: 8.36%
Annualized dividend yield at 03/31/01
based on net asset value: 8.57%
Portfolio Statistics
The Fund's investment portfolio had the following characteristics as of March 31, 2001:
Net Assets: $144.5mm
Average Duration: 5.82 years
Average Maturity: 7.30 years
Quality Ratings: 24.4% AAA, 6.7% AA, 6.6% A, 30.0% BBB,
25.4% BB, 6.6% B, 0.3% less than B
Average Quality: BBB+
Sector Weightings: 21% Multi-family (apartment buildings),
10% Healthcare (hospitals and nursing care
facilities), 8% Hospitality (hotels and
motels), 37% Multi-class (a mix of all
commercial property types, including
office buildings and industrial
properties), 12% Real Estate ABS,
3% Corporate, 3% Commercial Paper, 6% Other
Market Commentary and Outlook
The U.S. fixed income markets posted another period of solid gains in the fourth quarter spurred by falling inflation and a flight to safety by non-U.S. investors. The unfolding Asian economic collapse added fuel to the market's bullish sentiment, promoting investors worldwide to prefer the higher quality segments of the U.S. market, particularly Treasuries, for their relative safety. The prospect that a flood of cheap Asian imports might lower U.S. inflation further and reduce GDP growth, more than offset worries about a robust real estate market, increasing U.S. wage pressures and an unemployment rate that reached a 30-year low.
The Asian crisis gave the Fed two reasons not to raise rates: 1) anticipated slower growth made it unnecessary to use higher rates as a brake on the U.S. economy, and 2) higher rates would have aggravated the already tenuous situation in Asia by strengthening the dollar even more. As a result, the Fed demonstrated a willingness to tolerate a stronger dollar, despite its import/export implications that point toward higher trade deficits in the coming months. With short-term rates steady, and economic growth prospects moderating, the yield curve continued to flatten led by declines on long-term issues. By the end of the quarter, the yield advantage of longer maturity issues had narrowed significantly.
Against this backdrop, most segments of the commercial property market continued to exhibit signs of healthy growth. While building has accelerated modestly in the office and hotel sectors in response to rising profitability, supply in most markets has not exceeded demand. Likewise, construction activity in the multi-family housing sector has generally increased in lockstep with rising demand, and occupancy and lease rates have moved steadily higher in many markets. Increased construction has given rise to a corresponding increase in commercial loan generation. Consequently, the CMBS market also experienced impressive growth in 1997, with new issuance advancing more than 45% over 1996 levels, providing the underpinnings of an increasingly active secondary market for CMBS issues.
Despite these positive factors, the flight to quality generated momentum throughout the fourth quarter and investors grew increasingly skittish about the outlook for any securities that might be adversely impacted by slowing economic growth. These credit concerns prompted buyers to demand higher yield premiums on CMBS causing them to underperform like duration Treasuries for the quarter. This market reaction pushed average yield spreads on AAA-rated CMBS 0.15% wider, while BB and B-rated issues experienced spread widening of 0.5%. As a result, investment performance (based on the Fund's market price and net asset value) lagged the broad-based Lehman Aggregate Bond Index for the quarter but led significantly for the year.
Looking forward, the Fund's investment manager, Pacific Investment Management Company, expects that events in Asia will act as a damper on U.S. economic growth but should not cause a dramatic slowdown. In this environment, inflation should remain subdued, under pressure from global excess capacity and cheap imports, including commodities. While the U.S. consumer remains healthy, corporate profits will likely come under increasing pressure from rising wage costs and lower prices fostered by intensifying foreign competition.
For further information, please contact Jeff Sargent, PIMCO Commercial Mortgage Securities Trust, Inc., at (714) 760-4743.
Past performance is no guarantee of future results. Investment return, dividend rate and share price will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.