NEWPORT BEACH, Calif., Oct. 29, 1999 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period July 1, 1999, through Sept. 30, 1999 (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. 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 $181 billion of assets under management as of Sept. 30, 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
9/30/99 NYSE Share Price Net Asset Value
Third quarter (5.31)pct 0.99pct
One year 2.98pct 1.60pct
Three years (annualized) 9.76pct 8.49pct
Five years (annualized) 10.00pct 9.78pct
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 0.68pct, declined 0.37pct and rose 6.82pct and 7.84pct for the three months, one year, three years and five years ended Sept. 30, 1999, respectively (3 and 5 year numbers are annualized).
Price Information
Pricing Date NYSE Share Price Net Asset Value
Sept. 30, 1999 $12.6250 $13.14
June 30, 1999 $13.6250 $13.29
Sept. 30, 1998 $13.4375 $14.15
Premium/(Discount) to Net Asset Value
Sept. 30, 1999 (3.92)pct
June 30, 1999 2.52 pct
Sept. 30, 1998 (4.67)pct
Dividend Information
Regular monthly dividend per share: $ 0.09375
Total dividends declared in the quarter: $ 0.28125
Annualized dividend yield at 9/30/99
based on NYSE share price: 8.91pct
Annualized dividend yield at 9/30/99
based on net asset value: 8.56pct
Portfolio Statistics
The Fund's investment portfolio had the following
characteristics as of September 30, 1999:
Net Assets: $144,709,771.40
Average Duration: 5.16 years
Average Maturity: 6.65 years
Quality Ratings: 21.7pct AAA, 11.5pct AA, 11.4pct A,
27.1pct BBB, 18.7pct BB, 9.6pct B
Average Quality: BAA+
Sector Weightings: 27pct Multi-family (apartment
buildings), 19pct Healthcare (hospitals and nursing care
facilities), 10pct Hospitality (hotels and motels), 1pct
Retail (shopping centers), 33pct Multi-class (a mix of all
commercial property types, including office buildings and
industrial properties), 2pct Commercial Paper, 8pct Other
Market Commentary
Treasury yields ended the three-month period slightly higher after fluctuating in a 0.40pct to 0.50pct range as investor sentiment about rates shifted several times. The yield on the benchmark 30-year Treasury increased by 0.08pct to finish the quarter at 6.05pct. 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 1.21pct yield advantage over their 3-month counterparts.
In an effort to quell the prospect of rising inflation, the Federal Reserve Board raised the fed funds rate by 0.25pct twice during the past six months, setting the rate at 5.25pct and taking away two of the three rate reductions initiated during autumn of 1998. With the latest increase, the Fed indicated that they would maintain a neutral policy bias and stated that this increase "together with the policy action in June and the firming of conditions more generally in U.S. financial markets over recent months, should markedly diminish the risk of rising inflation going forward." That wording helped to reassure investors concerned about the potential for additional Fed rate hikes.
Bond markets took additional comfort from signs that the Fed rate increases were working to cool the economy and restrain inflation. Growth in jobs and wages slowed in August, which appeared to reduce the risk of wage inflation. The August consumer price index increased only slightly despite the continued rise in energy prices. Home mortgage rates surged to around 8%, slowing re-financings that have helped fuel the recent boom in consumer spending.
A considerable worry for investors during the period was the decline of the U.S. dollar, especially versus the Japanese yen, which threatened to boost inflation by pushing up import prices. The dollar's decline stemmed from a record U.S. trade deficit and raised the prospect that international investors may move capital from the U.S. markets to growing Asian and European economies. The strength of the dollar is more important now because of the growing percentage of domestic consumption satisfied by imports.
In this environment of range-bound interest rates and Fed tightening, the Fund's portfolio of commercial mortgage-backed securities ("CMBS") posted a favorable 0.99pct return for the third quarter based on net asset value and a -5.31pct return based on its NYSE share price. The Fund's total return based on net asset value outperformed the 0.68pct 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 2.52pct to -3.92pct. Nevertheless, longer term performance has continued strong with the Fund posting a return based on NYSE share price of 9.76pct for the three-year period and 10.00pct over the five-year period ended Sept. 30, 1999, outperforming the Index return of 6.82pct and 7.84pct 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. These dividend payouts equate to an annualized dividend yield of 8.91pct based on the Fund's NYSE trading price as of Sept. 30, 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.