NEWPORT BEACH, Calif., Jan. 31, 2000 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period October 1, 1999, through December 31, 1999 (fourth quarter).
PIMCO Commercial Mortgage Securities Trust, Inc. (the "Fund") is a closed-end bond fund which invests principally in investment grade commercial mortgage-backed securities. 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 ("PIMCO"), an investment adviser with more than $186.0 billion of assets under management as of December 31, 1999, is responsible for managing the Fund's investment portfolio.
Investment Performance, Price and Dividend Information
The Fund's valuation and investment performance information are as follows:
Total Return Investment Performance
Periods Ended Based on Based on
12/31/99 NYSE Share Price Net Asset Value
Fourth quarter (2.33)pct 0.63pct
One year (4.42)pct 2.44pct
Three years (annualized) 6.92pct 6.95pct
Five years (annualized) 11.28pct 9.99pct
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, declined 0.12 pct., declined 0.82 pct. and rose 5.73 pct. and 7.73 pct. for the three months, one year, three years and five years ended December 31, 1999, respectively (3 and 5 year numbers are annualized).
Price Information
Pricing Date NYSE Share Price Net Asset Value
December 31, 1999 $12.0000 $12.89
September 30, 1999 $12.6250 $13.14
December 31, 1998 $13.7500 $13.74
Premium/(Discount) to Net Asset Value
December 31, 1999 (6.90) pct.
September 30, 1999 (3.92) pct.
December 31, 1998 0.07 pct.
Dividend Information
Regular monthly dividend per share: $ 0.09375
Special dividend per share (declared December 16, 1999) $ 0.05000
Total dividends declared in the quarter: $ 0.33125
Total dividends declared for calendar 1999: $ 1.17500
Annualized dividend yield at 12/31/99 based
on NYSE share price: 9.79 pct.
Annualized dividend yield at 12/31/99 based
on net asset value: 9.12 pct.
Portfolio Statistics
The Fund's investment portfolio had the following
characteristics as of December 31, 1999:
Net Assets: $141,859,594
Average Duration: 5.33 years
Average Maturity: 6.84 years
Quality Ratings: 24.4 pct. AAA, 11.6 pct. AA, 10.1 pct. A,
26.0 pct. BBB, 18.7 pct. BB, 9.2 pct. B
Average Quality: BAA+
Sector Weightings: 27 pct. Multi-family (apartment buildings),
19 pct. Healthcare (hospitals and nursing
care facilities), 10 pct. Hospitality (hotels
and motels), 1 pct. Retail (shopping enters),
32 pct. Multi-class (a mix of all commercial
property types, including office buildings
and industrial properties), 4 pct. Commercial
Paper, 7 pct. Other
Market Commentary Interest rates moved higher during the fourth quarter, capping the worst year in the bond market since 1994, as investors anticipated that more Federal Reserve tightening would be needed to prevent the economy from overheating. Treasury yields increased across the maturity range with the yield on the benchmark 30-year Treasury increasing by 0.43 pct. to finish the quarter at 6.48 pct. The shape of the yield curve was little changed as rates rose in roughly parallel fashion. The curve remained steep at quarter end with 30-year Treasuries offering a 1.17 pct. yield advantage over their 3-month counterparts.
The past year was a difficult one for bond investors, with U.S. interest rates rising as much as 1.80 pct. for some maturities. This increase came as robust economic expansion in the U.S. and accelerating growth in Europe and Asia boosted demand for capital worldwide and caused inflation to rise from lows reached in the previous year.
The Federal Reserve raised the fed funds rate by 0.25 pct. to 5.5 pct. on November 16, the third such increase this year. The central bank has now taken back all three of its rate cuts from 1998, when market participants were preoccupied with the threat of global deflation and reduced liquidity in financial markets. The Fed left rates unchanged in December because of market uncertainties surrounding Y2K. Still, investors remained concerned that the combination of rapid growth and a dwindling pool of workers would increase wage pressures and force the Fed to tighten further in 2000.
An upward revision of third quarter growth to 5.7 pct., the fastest pace in almost a year, as well as surging consumer confidence heading into the holiday season did nothing to ease those concerns. Even so, there were signs that higher interest rates had begun to moderate the expansion. Investment in new housing fell and mortgage re-financings continued to decline as mortgage rates hovered near 8 pct.. Moreover, actual inflation remained relatively subdued, held in check by productivity gains and intense price competition in industries such as autos and apparel.
Rising interest rates have had the positive effect of sustaining existing commercial mortgage-backed securities ("CMBS") by limiting issuance of new securities. New issuance of CMBS declined from $80.0 billion in 1998 to $66 billion in 1999, representing a 17.5 pct. decrease. In addition, yield spreads between CMBS and ten-year Treasuries decreased over the quarter with spreads on both A-rated and BBB-rated CMBS declining 0.30 pct.
In this environment of rising interest rates and Fed tightening, the Fund's portfolio CMBS posted a favorable 0.63 pct. return for the fourth quarter based on net asset value and a -2.33 pct. return based on its NYSE share price. The Fund's total return based on net asset value outperformed the -0.12 pct. return of the Lehman Brothers Aggregate Bond Index (which includes Treasury, investment-grade corporate and residential mortgage-backed securities) over the three-month period. NYSE share price performance lagged the Fund's return based on net asset value due to a significant widening of the Fund's trading discount over the quarter from -3.92 pct. To -6.90 pct. Nevertheless, longer term performance has continued strong with the Fund posting a return based on NYSE share price of 6.92 pct. for the three-year period and 11.28 pct. over the five-year period ended December 31, 1999, outperforming the Index return of 5.73 pct. and 7.73 pct. over the same periods, respectively. The Fund maintained an uninterrupted and constant dividend throughout the quarter, holding the monthly per share rate steady at $0.09375. In addition, a special dividend of $0.05 per share was declared at quarter-end from ordinary income accumulated over the year in excess of the Fund's regular monthly distributions. These dividend payouts equate to an annualized dividend yield of 9.79 pct. based on the Fund's NYSE trading price as of December 31, 1999.
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.