NEWPORT BEACH, Calif., Oct. 31, 2000 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period July 1, 2000, through September 30, 2000 (third 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 ("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 ("PIMCO"), an investment adviser with more than $207 billion of assets under management as of September 30, 2000, 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
09/30/00 NYSE Share Price Net Asset Value
Third quarter 1.28% 2.52%
One year 4.71% 6.89%
Three years (annualized) 4.99% 5.99%
Five years (annualized) 9.40% 8.18%
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 3.01%, 6.99%, 5.93% and 6.47% for the three months, one year, three years and five years ended September 30, 2000, respectively (3 and 5 year numbers are annualized).
Price Information
Pricing Date NYSE Share Price Net Asset Value
September 30, 2000 $12.0000 $12.82
June 30, 2000 $12.1250 $12.78
September 30, 1999 $12.6250 $13.14
Premium/(Discount)
to Net Asset Value
September 30, 2000 (6.40)%
June 30, 2000 (5.13)%
September 30, 1999 (3.92)%
Dividend Information
Regular monthly dividend per share: $ 0.09375
Total dividends declared in the quarter: $ 0.28125
Annualized dividend yield at 09/30/00
based on NYSE share price: 9.38%
Annualized dividend yield at 09/30/00
based on net asset value: 8.78%
Portfolio Statistics
The Fund's investment portfolio had the following characteristics as of September 30, 2000:
Net Assets: $141mm
Average Duration: 5.72 years
Average Maturity: 7.13 years
Quality Ratings: 14.1% AAA, 11.2% AA, 10.0% A, 33.1% BBB,
24.3% BB, 7.3% B
Average Quality: BBB
Sector Weightings: 21% Multi-family (apartment
buildings), 17% Healthcare (hospitals and
nursing care facilities), 9% Hospitality
(hotels and motels), 35% Multi-class (a mix
of all commercial property types, including
office buildings and industrial
properties), 8% Real Estate ABS, 5%
Corporate, 5% Other
Market Commentary
Intermediate maturity Treasuries rallied in the third quarter as yields on two, five and 10-year notes fell as much as 0.39%. With yields on 30-year Treasuries remaining virtually unchanged, the long end of the yield curve reverted to a positive slope for the first time since mid-January 2000. However, yields on 3-month Treasuries increased by 0.34% to finish the quarter at 6.20%.
The dis-inversion of the long end of the yield curve came amid shifting market sentiment about the economy, Federal Reserve policy and the U.S. budget surplus. Oil prices hit their highest levels in a decade, which raised concerns about the potential for accelerating inflation, causing 30-year bonds to lose their appeal relative to less inflation-sensitive, shorter-maturity debt. Disappointing corporate earnings, reduced manufacturing activity, an up-tick in unemployment and slower retail sales were indications that growth was slowing.
Signs of a cooling economy allowed the Fed to leave the federal funds rate unchanged during the quarter. Optimism grew that the Fed's tightening cycle was over and its next move might be to ease. Potential for a less restrictive Fed boosted demand for two, five and 10-year notes. For much of this year investors were anxious to buy long-term Treasuries because of concern that buybacks financed by the federal budget surplus would create a scarcity of high quality 30-year bonds. However, support for the 30-year bond eroded during the third quarter, as the major presidential candidates' tax cut and spending plans threatened to consume the surplus.
Mortgages outperformed Treasuries, benefiting from low market volatility and attractive yield premiums. Corporate performance improved during the quarter but still trailed Treasuries for the full year. Investment-grade bonds outperformed as investors were drawn to yield premiums near historical wides. Yield spreads between commercial mortgage backed securities ("CMBS") and 10-year Treasuries narrowed over the third quarter with spreads on both AAA-rated and A-rated CMBS declining 0.12% and 0.15%, respectively.
The Fund's portfolio of CMBS posted a favorable 2.52% return for the third quarter based on net asset value and a 1.28% return based on its NYSE share price. In comparison, the Lehman Brothers Aggregate Bond Index (which includes Treasury, investment-grade corporate and residential mortgage-backed securities) returned 3.01% for the same period. Positive changes in yield spreads were offset by an exposure to below investment grade securities. NYSE share price performance lagged the Fund's return based on net asset value due to a widening of the Fund's trading discount to its net asset value over the quarter from -5.13% to -6.40%. Longer term performance continues to be strong with the Fund posting an annualized return based on NYSE share price of 9.40% for the five-year period ended September 30, 2000, outperforming the Index return of 6.47% over the same period. The Fund maintained an uninterrupted and constant dividend throughout the quarter, holding the monthly per share rate steady at $0.09375. These dividend payouts equate to an annualized dividend yield of 9.28% based on the Fund's NYSE trading price as of September 30, 2000.
For further information, please contact Jeff Sargent, PIMCO Commercial Mortgage Securities Trust, Inc., at (949) 720-6519.
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.