NEWPORT BEACH, Calif., Nov. 1, 2002 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period July 1, 2002 through September 30, 2002 (third quarter).
PIMCO Commercial Mortgage Securities Trust, Inc. (the "Fund") is a closed-end bond fund that invests principally in 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 $301.7 billion of assets under management as of September 30, 2002, 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
9/30/02 NYSE Share Price Net Asset Value
Third quarter 3.74% 4.81%
One year 15.70% 9.70%
Three years (annualized) 16.05% 10.82%
Five years (annualized) 11.55 8.68%
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 4.58%, 8.60%, 9.48% and 7.83% for the three months, one year, three years and five years ended September 30, 2002, respectively (3 and 5 year numbers are annualized).
Price Information
Pricing Date NYSE Share Price Net Asset Value
September 30, 2002 $14.75 $13.32
June 30, 2002 $14.49 $12.98
September 30, 2001 $14.00 $13.46
Premium/(Discount) to Net Asset Value
September 30, 2002 10.74%
June 30, 2002 11.63%
September 30, 2001 4.01%
Dividend Information
Regular monthly dividend per share: $ 0.09375
Total dividends declared in the quarter: $ 0.28125
Annualized dividend yield at 9/30/02
based on NYSE share price: 7.63%
Annualized dividend yield at 9/30/02
based on net asset value: 8.45%
Portfolio Statistics
The Fund's investment portfolio had the following characteristics
as of September 30, 2002:
Net Assets: $147.6mm
Average Duration: 4.09 years
Average Maturity: 5.25 years
Quality Ratings: 29.3% AAA, 7.8% AA, 10.2% A, 28.0% BBB,
19.1% BB, 5.4% B, 0.2%Less than B
Average Quality: A
Sector Weightings: 30% Multi-family (apartment buildings),
10% Healthcare (hospitals and nursing care facilities), 12%
Hospitality (hotels and motels), 32% Multi-class (a mix of all
commercial property types, including office buildings and industrial
properties), 8% Real Estate ABS, 4% Commercial Paper, 4% Other
Market Commentary
Investors flocked to the safety of Treasury bonds during the third quarter amid anxiety about sluggish global growth, the integrity of corporate accounting and governance practices and a potential U.S. war with Iraq. Treasury yields fell as much as 1.47%, with the 10-year yield plunging to 3.59%, its lowest level in more than 40 years. Fueled by the Treasury rally, the broad U.S. bond market, represented by the Lehman Aggregate Bond Index, returned 4.58%, while riskier assets such as stocks and high yield debt continued to struggle.
Growth in Europe was practically non-existent and Japan's economy remained moribund in the third quarter. That left U.S. consumers, bolstered by the lowest mortgage rates in three decades, zero interest car loans and rising real wages, as the only significant source of demand anywhere in the world. Concern about a so-called "double-dip" recession in the U.S. therefore centered on the risk that weakness in the corporate sector would infect consumer confidence and discourage spending. While unemployment remained relatively low at just under 6%, applications for jobless claims climbed as companies laid off workers to trim costs and boost cash flow.
Such efforts by companies to rehabilitate their credit quality did little to reassure corporate bond investors. The corporate bond market virtually shut down during July, recovered in August but then had another difficult month in September. A stream of bad news from high profile issuers reinforced risk aversion among lenders already bruised by accounting scandals. Negatives included the bankruptcy of U.S. Airways, a rating downgrade at major telecom lender J.P. Morgan Chase, a multi-billion dollar default by Conseco and the potential for energy pipeline firm El Paso to face penalties tied to the California energy crisis.
Treasuries continued their outperformance from the prior quarter as the appeal of high quality, liquid assets proved irresistible. Mortgages trailed Treasuries nominally and underperformed modestly on a like-duration basis, but held up better than corporates. The decline in Treasury yields pushed mortgage rates down as well, with current coupon FNMAs hitting an all-time low of 5.35%. However, lower mortgage rates sparked a surge in prepayments and market volatility, driving yield premiums relative to Treasuries about 0.70% wider than their tightest levels in the prior quarter. GNMAs, explicitly backed by the U.S. government, outperformed their conventional counterparts. Less prepayment sensitive lower coupon mortgages outpaced higher coupons.
The Fund's portfolio of commercial mortgage backed securities ("CMBS") posted a favorable 4.81% return for the third quarter based on net asset value and a 3.74% 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 4.58% for the same period. NYSE share price return lagged the Fund's return based on net asset value due a slight narrowing of the Fund's trading premium over the quarter from 11.63% to 10.74%. Longer term performance continues to be strong with the Fund posting an annualized return based on net asset value of 10.82% for the three-year period and 8.68% for the five-year period ended September 30, 2002, outperforming Index returns of 9.48% and 7.83% over the same periods. 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 7.63% based on the Fund's NYSE trading price as of September 30, 2002.
Past performance is no guarantee of future results. Investment return, dividend rate and share price will fluctuate so that shares, when sold, may be worth more or less than their original cost.