UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
April 22, 2003
(Date of Report (Date of Earliest Event Reported))
MUNICIPAL MORTGAGE & EQUITY, LLC
(Exact Name of Registrant as Specified in Its Charter)
Delaware 011-11981 52-1449733
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
218 North Charles Street, Suite 500,
Baltimore, Maryland 21201
(Address of Principal Executive Offices) (Zip Code)
(443) 263-2900
(Registrant's Telephone Number, including Area Code)
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description of Document
99.1 Earnings Package, dated March 31, 2003
99.2 Earnings Press Release and Financial Statements,
dated March 31, 2003
99.3 Production Press Release, dated March 31, 2003
Item 12. Results of Operations and Financial Condition.
On April 22, 2003, Municipal Mortgage & Equity, LLC (the "Company"),
distributed an earnings package to Analysts relating to the Company's financial
performance for the quarter ended March 31, 2003. A copy of the package, dated
March 31, 2003, is attached hereto as Exhibit 99.1.
On April 22, 2003, the Company distributed an earnings press release and
financial statements relating to the Company's financial performance for the
quarter ended March 31, 2003. A copy of the press release and financial
statements, dated March 31, 2003, are attached hereto as Exhibit 99.2.
On April 22, 2003, the Company distributed a production press release
relating to the Company's production volume for the quarter ended March 31,
2003. A copy of the press release, dated March 31, 2003, is attached hereto as
Exhibit 99.3.
Exhibit 99.1
MUNICIPAL MORTGAGE AND EQUITY, LLC
EARNINGS PACKAGE
QUARTER ENDED MARCH 31, 2003
TABLE OF CONTENTS
GAAP Income Statement for the quarter ended
March 31, 2003 Page 5
Variance Analysis for GAAP Page 6
Rolling Five Quarters - GAAP Page 7
Calculation of Diluted Earnings Per Share Page 8
GAAP Net Income to CAD reconciliation for the
rolling five quarters Page 9
CAD Statement for the quarter ended March 31, 2003 Page 11
Variance Analysis for CAD Page 12
Rolling Five Quarters - CAD Page 13
Condensed Balance Sheets and Book Value Per Share Page 14
Summary of 1st Quarter 2003 Investment Activity Page 15
Participating Portfolio Property Net Operating
Income Trends Page 16
Units and Average Rents for Bond Portfolio Page 17
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
For the three months ended
March 31,
----------------------------------
2003 2002
---------------- ----------------
INCOME:
Interest income
Interest on bonds and residual interests in bond securitizations $ 15,985 $ 15,162
Interest on loans 9,503 8,430
Interest on short-term investments 192 487
---------------- ----------------
Total interest income 25,680 24,079
---------------- ----------------
Fee income
Syndication fees 1,411 1,618
Origination fees 698 1,089
Loan servicing fees 1,909 1,908
Asset management and advisory fees 1,076 867
Other income 2,197 1,145
---------------- ----------------
Total fee income 7,291 6,627
---------------- ----------------
Net gain on sales 1,278 2,166
---------------- ----------------
Total income 34,249 32,872
---------------- ----------------
EXPENSES:
Interest expense 10,368 8,972
Salaries and benefits 5,966 4,827
General and administrative 1,656 1,726
Professional fees 989 637
Amortization of mortgage servicing rights and other intangibles 389 318
---------------- ----------------
Total expenses 19,368 16,480
---------------- ----------------
Net holding gains on derivatives 2,873 3,112
Impairments and valuation allowances related to investments - (110)
Net losses from equity investments in partnerships (747) (323)
Income tax expense (68) (1,031)
Income allocable to preferred shareholders in a subsidiary company (2,994) (2,994)
---------------- ----------------
Net income $ 13,945 $ 15,046
================ ================
LESS:
Net income allocable to term growth shares - 153
---------------- ----------------
Net income allocated to common shares $ 13,945 $ 14,893
================ ================
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Basic earnings per common share $ 0.51 $ 0.63
================ ================
Weighted average common shares outstanding 27,342,870 23,584,635
Diluted earnings per share:
Diluted earnings per common share $ 0.50 $ 0.62
================ ================
Weighted average common shares outstanding 27,681,511 24,200,030
VARIANCE ANALYSIS FOR GAAP
1st Quarter 2003 Compared to 1st Quarter 2002:
Total income for the first quarter of 2003 increased $1.4 million over the same
period last year due primarily to the following changes: (1) a $1.6 million
increase in total interest income due primarily to a $1.9 million increase in
collections of interest on bonds, residual interests in bond securitizations and
loans. This increase resulted from an increase in on-balance sheet assets
related to securitizations and larger average notes receivable balances and was
offset by a $0.3 million decrease in interest on short-term investments
resulting from funding of operations as well as lower investment yields; (2) a
$0.7 million increase in fee income due primarily to a $1.1 million increase in
other income related to prepayment fees from early payment of tax-exempt bond
investments, offset by a $0.4 million decrease in origination fees related to a
decrease in the volume of permanent loan and conventional equity transactions
closed during the quarter; and (3) a $0.9 million decrease in gain on sales due
primarily to: (i) a $0.8 million decrease in the gain on sales of permanent
loans caused by a decrease in the volume of permanent loans sold; (ii) a $1.0
million gain that was recognized in first quarter of 2002 related to the
restructuring of a securitization trust; offset by (iii) a $0.8 million increase
in the gain on sales of loans related to an increase in premiums on the delivery
of loans to HUD and gain on sales of loans to a new conduit lender; and (iv) a
$0.1 million gain on sales of investments in partnerships.
Total expenses for the first quarter of 2003 increased $2.9 million over the
same period last year due primarily to the following changes: (1) a $1.4 million
increase in interest expense associated with an increase in financing costs
related to on-balance-sheet securitizations and larger average notes payable
balances outstanding during the quarter; (2) a $1.1 million increase in salaries
and benefits resulting from a $0.3 million increase in salaries and other
compensation and a $0.9 million increase in bonus expense, offset by a $0.1
million decrease in temporary assistance and employment advertising; and (3) a
$0.4 million increase in professional fees due primarily to a $0.2 million
increase in legal fees, a $0.5 million increase in consulting fees and a $0.1
million increase in printing expense, offset by a $0.5 million decrease in
commission expense. Commission expense is no longer incurred by the Company
because the pass-through of commission income and expense has been transferred
to the syndicated tax credit equity funds.
The Company also recorded net holding gains of $2.9 million for the change in
market value of the Company's derivative financial instruments, $0.7 million of
losses from equity investments in partnerships and $0.1 million in income tax
expense in the first quarter of 2003. Income tax expense decreased by $0.9
million from the same period in 2002 primarily as a result of taxable losses
generated by the investment in the CAPREIT 3M venture.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
03/31/03 12/31/02 09/30/02 06/30/02 03/31/02
------------- ------------- ------------ ------------ ------------
INCOME:
Interest income
Interest on bonds and residual interests in bond
securitizations $ 15,985 $ 13,953 $ 15,409 $ 15,399 $ 15,162
Interest on loans 9,503 9,195 8,676 8,594 8,430
Interest on short-term investments 192 264 260 244 487
------------- ------------- ------------ ------------ ------------
Total interest income 25,680 23,412 24,345 24,237 24,079
------------- ------------- ------------ ------------ ------------
Fee income
Syndication fees 1,411 2,456 767 2,380 1,618
Origination fees 698 2,023 2,014 1,505 1,089
Loan servicing fees 1,909 1,711 1,544 1,660 1,908
Asset management and advisory fees 1,076 1,011 969 1,040 867
Other income 2,197 1,132 899 1,259 1,145
------------- ------------- ------------ ------------ ------------
Total fee income 7,291 8,333 6,193 7,844 6,627
------------- ------------- ------------ ------------ ------------
Net gain on sales 1,278 5,032 657 703 2,166
------------- ------------- ------------ ------------ ------------
Total income 34,249 36,777 31,195 32,784 32,872
------------- ------------- ------------ ------------ ------------
EXPENSES:
Interest expense 10,368 10,366 8,771 8,487 8,972
Salaries and benefits 5,966 6,475 5,446 5,930 4,827
General and administrative 1,656 1,841 1,756 1,697 1,726
Professional fees 989 1,472 884 1,967 637
Amortization of mortgage servicing rights and other
intangibles 389 329 334 333 318
------------- ------------- ------------ ------------ ------------
Total expenses 19,368 20,483 17,191 18,414 16,480
------------- ------------- ------------ ------------ ------------
Net holding gains (losses) on derivatives 2,873 (333) (9,921) (7,721) 3,112
Impairments and valuation allowances related to investments - (620) - - (110)
Net gains (losses) from equity investments in partnerships (747) (1,341) (1,487) 94 (323)
Income tax benefit (expense) (68) (260) 635 (828) (1,031)
Income allocable to preferred shareholders in a subsidiary
company (2,994) (2,994) (2,994) (2,995) (2,994)
------------- ------------- ------------ ------------ ------------
Net income $ 13,945 $ 10,746 $ 237 $ 2,920 $ 15,046
============= ============= ============ ============ ============
LESS:
Net income allocable to term growth shares - - - - 153
------------- ------------- ------------ ------------ ------------
Net income allocated to common shares $ 13,945 $ 10,746 $ 237 $ 2,920 $ 14,893
============= ============= ============ ============ ============
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Basic earnings per common share $ 0.51 $ 0.42 $ 0.01 $ 0.12 $ 0.63
============= ============= ============ ============ ============
Weighted average common shares outstanding 27,342,870 25,426,254 25,329,103 25,252,124 23,584,635
Diluted earnings per common share:
Diluted earnings per common share $ 0.50 $ 0.41 $ 0.01 $ 0.11 $ 0.62
============= ============= ============ ============ ============
Weighted average common shares outstanding 27,681,511 25,917,641 25,916,151 25,835,808 24,200,030
Note: Certain prior quarter amounts have been reclassified to conform to
the 03/31/03 presentation.
Municipal Mortgage & Equity, LLC
Reconciliation of Basic and Diluted EPS
(unaudited)
For the three months ended March 31, 2003 For the three months ended March 31, 2002
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ----------- ----------- ------------- ----------
(in thousands, except share and per share data)
Basic EPS
Income allocable to common shares $ 13,945 27,342,870 $ 0.51 $ 14,893 23,584,635 $ 0.63
=========== ==========
Effect of Dilutive Securities
Options and deferred shares - 338,641 - 482,540
Earnings contingency - - - 132,855
----------- ------------- ----------- -------------
Diluted EPS
Income allocable to common shares
plus assumed conversions $ 13,945 27,681,511 $ 0.50 $ 14,893 24,200,030 $ 0.62
=========== ============= =========== =========== ============= ==========
MUNICIPAL MORTGAGE & EQUITY, LLC
RECONCILIATION OF GAAP NET INCOME TO CASH AVAILABLE FOR DISTRIBUTION
(In thousands)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
03/31/03 12/31/02 09/30/02 06/30/02 03/31/02
------------ ------------ ------------ ------------ ------------
INCOME:
Interest income
Interest on bonds and residual interests in bond
securitizations $ 15,985 $ 13,953 $ 15,409 $ 15,399 $ 15,162
Interest on loans 9,503 9,195 8,676 8,594 8,430
Interest on short-term investments 192 264 260 244 487
------------ ------------ ------------ ------------ ------------
Total interest income 25,680 23,412 24,345 24,237 24,079
------------ ------------ ------------ ------------ ------------
Fee income
Syndication fees 1,411 2,456 767 2,380 1,618
Origination fees 698 2,023 2,014 1,505 1,089
Loan servicing fees 1,909 1,711 1,544 1,660 1,908
Asset management and advisory fees 1,076 1,011 969 1,040 867
Other income 2,197 1,132 899 1,259 1,145
------------ ------------ ------------ ------------ ------------
Total fee income 7,291 8,333 6,193 7,844 6,627
------------ ------------ ------------ ------------ ------------
Net gain on sales 1,278 5,032 657 703 2,166
------------ ------------ ------------ ------------ ------------
Total income 34,249 36,777 31,195 32,784 32,872
------------ ------------ ------------ ------------ ------------
EXPENSES:
Interest expense 10,368 10,366 8,771 8,487 8,972
Salaries and benefits 5,966 6,475 5,446 5,930 4,827
General and administrative 1,656 1,841 1,756 1,697 1,726
Professional fees 989 1,472 884 1,967 637
Amortization of mortgage servicing rights and other
intangibles 389 329 334 333 318
------------ ------------ ------------ ------------ ------------
Total expenses 19,368 20,483 17,191 18,414 16,480
------------ ------------ ------------ ------------ ------------
Net holding gains (losses) on derivatives 2,873 (333) (9,921) (7,721) 3,112
Impairments and valuation allowances related to investments - (620) - - (110)
Net gains (losses) from equity investments in partnerships (747) (1,341) (1,487) 94 (323)
Income tax benefit (expense) (68) (260) 635 (828) (1,031)
Income allocable to preferred shareholders in a subsidiary
company (2,994) (2,994) (2,994) (2,995) (2,994)
------------ ------------ ------------ ------------ ------------
Net income $ 13,945 $ 10,746 $ 237 $ 2,920 $ 15,046
============ ============ ============ ============ ============
LESS:
Net income allocable to term growth shares - - - - 153
------------ ------------ ------------ ------------ ------------
Net income allocated to common shares - GAAP Basis $ 13,945 $ 10,746 $ 237 $ 2,920 $ 14,893
============ ============ ============ ============ ============
Conversion to Cash Available for Distribution:
(1)Mark to market adjustments $ (2,873) $ 333 $ 9,921 $ 7,721 $ (3,112)
(2)Equity investments 2,409 2,836 3,248 79 440
(3)Net gain on sales (327) (3,395) (450) (601) (2,126)
(3)Amortization of capitalized mortgage servicing fees 352 329 334 334 318
(4)Origination fees and other income, net 282 1,377 53 1,449 673
(5)Valuation allowances and other-than-temporary impairments - 620 - - 110
(6)Deferred tax expense 628 703 (462) 483 617
------------ ------------ ------------ ------------ ------------
Cash Available for Distribution (CAD) $ 14,416 $ 13,549 $ 12,881 $ 12,385 $ 11,813
============ ============ ============ ============ ============
Notes
-----
(1) For GAAP reporting, the Company records the non-cash change in fair
value of its investment in interest rate swaps and other derivative financial
instruments through net income. These non-cash gains and losses are not included
in the Company's calculation of CAD.
(2) For GAAP reporting, the Company accounts for various investments in
partnerships using the equity accounting method. As a result, the Company's
allocable share of the income or loss from the partnerships is reported in
income (losses) from equity investments in partnerships. The income from these
partnerships includes depreciation expense and changes in the fair value of
investments in derivatives. For GAAP reporting, distributions are treated as a
return of capital. For CAD reporting, the Company records the cash distributions
it receives from the partnerships as other income.
(3) For GAAP reporting, the Company recognizes non-cash gains and losses
associated with the sale of assets or capitalization of mortgage servicing
rights. The capitalized mortgage servicing rights are amortized into expense
over the estimated life of the serviced loans. The non-cash gains and the
associated amortization expense are not included in CAD.
(4) Origination fees and certain other income amounts are recognized as
income when received for CAD purposes, but for GAAP reporting these items are
deferred and amortized into income over the life of the associated investment.
This adjustment represents the net difference, for the relevant period, between
fees taken into income when received for CAD and the amortization of fees
recorded for GAAP.
(5) For GAAP reporting, the Company records valuation allowances and
other-than-temporary impairments on its investments in loans, bonds and other
bond-related investments. Such non-cash charges do not affect the cash flow
generated from the operation of the underlying properties, distributions to
shareholders, or the tax-exempt status of the income of the financial obligation
under the bonds. Therefore, these items are not included in the calculation of
CAD.
(6) For GAAP reporting, the Company's income tax expense contains both a
current and a deferred component. Only the Company's current income tax expense
is reflected in CAD.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(In thousands, except share and per share data)
(unaudited)
For the three months ended
March 31,
----------------------------------------
2003 2002
------------------ ------------------
SOURCES OF CASH:
Interest on bonds, residual interests in bond securitizations and loans $ 24,848 $ 22,963
Interest on short-term investments 192 487
Loan servicing fees 1,909 1,908
Origination and syndication fees 2,571 3,126
Other income 4,998 2,330
Net gain on sales 951 40
------------------ ------------------
TOTAL SOURCES OF CASH 35,469 30,854
------------------ ------------------
EXPENSES:
Interest expense 9,839 8,290
Salaries and benefits 5,966 4,827
Professional fees 989 637
General and administrative 1,825 1,726
Income taxes (560) 414
------------------ ------------------
TOTAL EXPENSES 18,059 15,894
------------------ ------------------
CASH AVAILABLE FOR DISTRIBUTION 17,410 14,960
------------------ ------------------
LESS:
Cash allocable to preferred shareholders in a subsidiary company
and term growth shares 2,994 3,147
------------------ ------------------
CASH AVAILABLE FOR DISTRIBUTION TO COMMON SHARES $ 14,416 $ 11,813
================== ==================
CAD PER COMMON SHARE $ 0.50 $ 0.47
================== ==================
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 14,416 $ 11,813
================== ==================
ACTUAL AMOUNT PAID $ 12,837 $ 10,968
================== ==================
PAYOUT RATIO 89.0% 92.8%
================== ==================
COMMON SHARES OUTSTANDING 28,846,327 25,213,482
================== ==================
CASH DISTRIBUTION PER COMMON SHARE $ 0.4450 $ 0.4350
================== ==================
Cash Available for Distribution ("CAD") differs from net income because of
variations between generally accepted accounting principles ("GAAP") income and
actual cash received. There are three primary differences between CAD and GAAP
income. The first is the treatment of loan origination fees, which for CAD
purposes are recognized as income when received but for GAAP purposes are
amortized into income over the life of the associated investment. The second
difference is the non-cash gain and loss recognized for GAAP associated with
valuations, sales of investments and capitalization of mortgage servicing
rights, which are not included in the calculation of CAD. The third difference
is the treatment of the Company's investments in partnerships. For GAAP, the
Company records its allocable share of the income (loss) from the partnership as
income, while for CAD reporting, the Company records the cash distributions it
receives from the partnership as income. For a reconciliation of GAAP net income
to CAD, see page 9.
CAD per common share is calculated based on the number of shares
outstanding at the end of each quarter. For GAAP, basic net income per share is
calculated based on the weighted average shares outstanding during the period.
The weighted average shares outstanding for diluted net income per share include
the potential dilutive effect from the exercise of options, vesting of
restricted shares, and provision for shares to be awarded under the Midland
acquisition earn out provision.
VARIANCE ANALYSIS FOR CAD
1st Quarter 2003 Compared to 1st Quarter 2002:
Total income for the first quarter of 2003 increased $4.6 million over the same
period last year due primarily to the following changes: (1) a $2.7 million
increase in other income due primarily to: (i) a $1.7 million increase in income
from the CAPREIT investments made in the third quarter of 2002; (ii) a $0.6
million commitment fee collected on a conventional equity deal; (iii) $0.9
million in prepayment fees collected from the early payment of tax-exempt bond
investments; and (iv) a $0.5 million decrease in commission income; (2) a $1.9
million increase in collections of interest on bonds, residual interests in bond
securitizations and loans; (3) a $0.9 million increase in gain on sales related
to an increase in premiums on the delivery of loans to HUD and gain on sale on
delivery of loans to a new conduit lender; and (4) a $0.6 million decrease in
origination and syndication fees. The $0.4 million decrease in origination fees
is due to a decrease in the volume of permanent loans and conventional equity
transactions closed during the quarter. The $0.2 million decrease in syndication
fees is a result of taking $0.5 million in organizational and offering cost
reimbursements related to closed syndicated tax credit equity funds into income
during the first quarter of 2002, whereas no such fees were recognized during
the first quarter of 2003. This decrease was partially offset by an increase in
the volume of syndications closed.
Total expenses for the first quarter increased $2.2 million over the same period
last year due primarily to the following changes: (1) a $1.5 million increase in
interest expense associated with an increase in financing costs related to
on-balance-sheet securitizations and larger average notes payable balances
outstanding during the quarter; (2) a $1.1 million increase in salaries and
benefits resulting from a $0.3 million increase in salaries and other
compensation and a $0.9 million increase in bonus expense, offset by a $0.1
million decrease in temporary assistance and employment advertising; (3) a $1.0
million decrease in income tax expense primarily as a result of taxable losses
generated by the investment in the CAPREIT 3M venture; and (4) a $0.4 million
increase in professional fees due primarily to a $0.2 million increase in legal
fees, a $0.5 million increase in consulting fees and a $0.1 million increase in
printing expense, offset by a $0.5 million decrease in commission expense.
Commission expense is no longer incurred by the Company because the pass-through
of commission income and expense has been transferred to the syndicated tax
credit equity funds.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(In thousands, except share and per share data)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
03/31/03 12/31/02 09/30/02 06/30/02 03/31/02
------------- ------------- ------------- ------------- -------------
SOURCES OF CASH:
Interest on bonds, other bond-related investments,
other notes and loans $ 24,848 $ 22,596 $ 23,331 $ 23,377 $ 22,963
Interest on short-term investments 192 264 260 244 487
Loan servicing fees 1,909 1,711 1,544 1,660 1,908
Origination and syndication fees 2,571 5,463 2,973 5,385 3,126
Other income 4,998 4,155 3,607 2,451 2,330
Net gain on sales 951 1,637 207 102 40
------------- ------------- ------------- ------------- -------------
TOTAL SOURCES OF CASH 35,469 35,826 31,922 33,219 30,854
------------- ------------- ------------- ------------- -------------
EXPENSES:
Interest expense 9,839 9,899 8,134 7,900 8,290
Salaries and benefits 5,966 6,475 5,446 5,930 4,827
Professional fees 989 1,472 884 1,967 637
Other operating expenses 1,825 1,880 1,756 1,697 1,726
Income taxes (560) (443) (173) 345 414
------------- ------------- ------------- ------------- -------------
TOTAL EXPENSES 18,059 19,283 16,047 17,839 15,894
------------- ------------- ------------- ------------- -------------
CASH AVAILABLE FOR DISTRIBUTION 17,410 16,543 15,875 15,380 14,960
LESS:
Cash allocable to preferred shareholders in a subsidiary
company and term growth shares 2,994 2,994 2,994 2,995 3,147
------------- ------------- ------------- ------------- -------------
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 14,416 $ 13,549 $ 12,881 $ 12,385 $ 11,813
============= ============= ============= ============= =============
CAD PER COMMON SHARE $ 0.50 $ 0.53 $ 0.51 $ 0.49 $ 0.47
============= ============= ============= ============= =============
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 14,416 $ 13,549 $ 12,881 $ 12,385 $ 11,813
============= ============= ============= ============= =============
ACTUAL AMOUNT PAID $ 12,837 $ 11,304 $ 11,154 $ 11,072 $ 10,968
============= ============= ============= ============= =============
PAYOUT RATIO 89.0% 83.4% 86.6% 89.4% 92.8%
============= ============= ============= ============= =============
COMMON SHARES OUTSTANDING 28,846,327 25,546,010 25,349,585 25,308,022 25,213,482
============= ============= ============= ============= =============
CASH DISTRIBUTION PER COMMON SHARE $ 0.4450 $ 0.4425 $ 0.4400 $ 0.4375 $ 0.4350
============= ============= ============= ============= =============
Note: Certain prior quarter amounts have been reclassified to conform to
the 03/31/03 presentation.
CAD differs from net income because of variations between GAAP income and
actual cash received. There are three primary differences between CAD and GAAP
income. The first is the treatment of loan origination fees, which for CAD
purposes are recognized as income when received but for GAAP purposes are
amortized into income over the life of the associated investment. The second
difference is the non-cash gain and loss recognized for GAAP associated with
valuations, sales of investments and capitalization of mortgage servicing
rights, which are not included in the calculation of CAD. The third difference
is the treatment of the Company's investments in partnerships. For GAAP, the
Company records its allocable share of the income (loss) from the partnership as
income, while for CAD reporting, the Company records the cash distributions it
receives from the partnership as income. For a reconciliation of GAAP net income
to CAD, see page 9.
CAD per common share is calculated based on the number of shares
outstanding at the end of each quarter. For GAAP, basic net income per share is
calculated based on the weighted average shares outstanding during the period.
The weighted average shares outstanding for diluted net income per share include
the potential dilutive effect from the exercise of options, vesting of
restricted shares, and provision for shares to be awarded under the Midland
acquisition earn out provision.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
March 31, December 31,
2003 2002
-------------- --------------
ASSETS:
Investment in tax-exempt bonds and residual interests
in bond securitizations $ 812,287 $ 781,384
Loans receivable, net 440,112 461,448
Investments in partnerships 98,756 99,966
Investment in derivative financial instruments 18,404 18,762
Cash, cash equivalents and interest receivable 65,986 59,902
Other assets 84,805 97,919
Goodwill 33,589 33,537
-------------- --------------
TOTAL $ 1,553,939 $ 1,552,918
============== ==============
LIABILITIES AND EQUITY:
Notes payable $ 381,073 $ 450,924
Short-term debt 219,590 219,945
Long-term debt 146,987 147,357
Residual interests in bond securitizations 1,438 1,447
Investment in derivative financial instruments 46,128 49,359
Current liabilities 31,052 36,357
Preferred shareholders' equity in a subsidiary company 160,465 160,465
Shareholders' equity 567,206 487,064
-------------- --------------
TOTAL $ 1,553,939 $ 1,552,918
============== ==============
BOOK VALUE PER COMMON SHARE $ 19.66 $ 19.07
============== ==============
MUNICIPAL MORTGAGE & EQUITY, LLC
2003 INVESTMENTS
FIRST QUARTER
(In thousands)
BOND PRODUCTION: QUARTER
PERMANENT BOND AMOUNT
INTEREST ----------------------------------
PROPERTY CITY STATE RATE CONSTRUCTION PERMANENT
--------------------------------------------------------- -------------- ---------- ---------- ----------------- ----------------
Autumn Oaks/Thousand Oaks (1) San Antonio TX 7.200% - 13,375,000
Liberty Park (2) Camden NJ 7.450% 9,350,000 9,350,000
----------------- ----------------
TOTAL $ 9,350,000 $ 22,725,000
================= ================
(1) The Company earned a 1.00% origination fee on this deal.
(2) The Company's initial investment in these bonds was $5.3 million. The
Company earned a 1.25% origination fee on this deal.
CONSTRUCTION/PERMANENT LENDING, SYNDICATION AND OTHER PRODUCTION:
TOTAL FEES
RECOGNIZED
QUARTER THIS QUARTER
VOLUME FOR CAD
----------------- --------------
Tax Credit Equity Syndications (Equity Raised) $ 35,319 $ 1,411
Tax Credit Lending Production $ 25,773 $ -
Conventional Equity Production $ 3,310 $ 116
Taxable Construction Loan Production (generating
a weighted average spread of 1.18%) $ 38,592 $ 407
Taxable Permanent Loan Production $ 37,193 $ 563
Supplemental Loans $ 16,818 $ 228
OTHER INFORMATION:
Balance as of 3/31/03 of Midland Servicing Portfolio
under Management $ 1,104,021 $ 1,132
Balance as of 3/31/03 of Midland Equity Syndication
Portfolio under Management $ 872,054 $ 816
MUNICIPAL MORTGAGE & EQUITY, LLC
PARTICIPATING BOND PORTFOLIO
NET OPERATING INCOME - TREND
As of March 31, 2003
Q1 2002 Q4 2002 Q1 2003 (2) Q1 '03/ Q1 '03/
Property Actual Actual Actual Q1 '02 Q4 '02
--------- ------- ------- ------- -------- --------
Alban 275,263 239,695 250,336 -9.1% 4.4%
(1) Arlington 0 -10,989 -2,315 N/A -78.9%
Barkley Place 408,233 167,026 309,728 -24.1% 85.4%
(1) Barrington at Beach Street 33,844 137,698 176,137 420.4% 27.9%
Cobblestone 171,316 165,532 152,517 -11.0% -7.9%
(1) Cool Springs -99,615 31,961 37,840 -138.0% 18.4%
Creekside 290,387 292,195 286,799 -1.2% -1.8%
Crossings 166,016 153,686 193,113 16.3% 25.7%
Gilman Meadows 185,601 156,969 169,690 -8.6% 8.1%
Hamilton Grove 238,469 178,965 174,555 -26.8% -2.5%
Jefferson Commons 524,771 284,836 412,727 -21.4% 44.9%
Lakeview 207,168 188,801 154,182 -25.6% -18.3%
Mallard I 34,090 34,006 35,081 2.9% 3.2%
Mallard II 106,062 111,175 98,128 -7.5% -11.7%
Montclair 398,527 259,291 341,713 -14.3% 31.8%
Newport Village 280,354 216,901 208,174 -25.7% -4.0%
Nicollet Ridge 339,652 357,517 379,039 11.6% 6.0%
North Pointe 582,135 558,835 641,338 10.2% 14.8%
Palisades Park 242,262 247,662 248,546 2.6% 0.4%
Riverset I 365,203 383,727 387,552 6.1% 1.0%
Riverset II 160,726 182,374 164,847 2.6% -9.6%
Steeplechase Falls 387,299 317,990 441,482 14.0% 38.8%
Meadows 171,587 137,729 139,658 -18.6% 1.4%
Timber Ridge 159,811 149,129 139,260 -12.9% -6.6%
Villas at LaRiviera 238,384 254,038 229,933 -3.5% -9.5%
Whispering Lake 290,339 332,708 320,967 10.5% -3.5%
Winter Oaks 272,164 301,480 289,681 6.4% -3.9%
----------------------------------------- ----------------------
Total 6,430,050 5,830,937 6,380,707 -0.8% 9.4%
Same Store Growth 6,495,820 5,672,267 6,169,045 -5.0% 8.8%
(1) In Lease-up. Quarterly totals are not included in Same Store Growth
calculations.
(2) Q1 2003 represents two months actual, one month budget
Occupancy
---------------------------------------------------
Month Ended Month Ended Month Ended Month Ended
Month/Year Apartment March 31, Dec. 31, March 31, March 31,
Apartment Community Acquired Units 2003 2002 2002 2001
---------------------- ---------- --------- ---------------------------------------------------
Participating Mortgage Bonds:
Alban Place Sep-86 194 94.8% 93.3% 94.3% 93.3%
Cobblestone Aug-99 184 92.4% 92.4% 94.6% 94.0%
Creekside Village Nov-87 296 99.7% 99.7% 99.7% 99.7%
Crossings Jan-97 200 89.0% 87.0% 93.5% 97.0%
Jefferson Commons Dec-00 173 88.0% 84.8% 93.1% 97.1%
Lakeview Sep-87 180 96.1% 91.7% 97.8% 99.4%
North Pointe Sep-86 540 90.9% 94.3% 96.9% 93.7%
Timber Ridge Dec-00 168 96.4% 94.0% 94.6% 95.2%
Villas at LaRiviera Jun-99 199 91.0% 97.5% 98.0% 97.5%
--------
Subtotal Participating Mortgage Bonds 2,134
--------
Mortgage Bonds
Applewood (a.k.a. Paola) Jul-99 48 97.9% 85.4% 93.8% 93.8%
Buchanan Bay Mar-01 228 89.0% 89.5% 72.8% 90.8%
Charter House (2) Dec-96 ---- N/A N/A N/A N/A
Cielo Vista Aug-99 378 90.5% 90.5% 97.1% 87.0%
Country Club Jul-99 101 85.1% 86.1% 94.1% 86.1%
Delta Village Jun-99 80 95.0% 97.5% 98.8% 96.3%
Elmbrooke Aug-00 54 100.0% 100.0% 100.0% 77.8%
Florida A&M Feb-00 96 86.5% 90.1% 72.9% 93.8%
Gannon (Dade) (3) Feb-98 799 96.7% 97.0% 95.4% 97.3%
Gannon (St. Louis) Feb-98 336 93.2% 87.5% 92.3% 92.0%
Hidden Valley Dec-96 82 92.7% 89.0% 90.2% 98.8%
Honey Creek Mar-99 656 97.7% 91.8% 93.9% 96.8%
Hunter's Glen Mar-01 383 74.4% 74.4% 89.6% 86.7%
Lake Piedmont Apr-98 648 88.4% 88.6% 92.4% 79.2%
Monroe (Oakmont, Towne Oak) Dec-98 364 97.5% 97.3% 98.6% 99.5%
Mountain View (Willowgreen) Nov-86 241 91.3% 92.9% 95.4% 97.1%
Northridge Park II Aug-87 128 90.6% 84.4% 99.2% 97.7%
Oakbrook Dec-96 170 100.0% 98.2% 95.9% 97.6%
Oklahoma City (4) Aug-98 774 95.2% 91.6% 87.2% 94.3%
Orangevale Apr-98 64 98.4% 98.4% 100.0% 100.0%
Parkwood Jun-99 180 99.4% 95.6% 97.8% 99.4%
Riverset II (1) Jan-96 ---- N/A N/A N/A N/A
Riverview Jun-00 228 97.8% 96.9% 50.4% N/A
Sahuarita Jun-99 52 86.5% 90.4% 100.0% 100.0%
Santa Fe Springs Jun-00 310 77.1% 84.5% 81.9% 91.3%
Shadowbrook Jun-99 193 98.4% 97.9% 99.0% 99.0%
Silver Springs Dec-99 250 90.0% 92.4% 88.0% 19.2%
Southwind Aug-00 88 100.0% 100.0% 95.5% 70.5%
Torries Chase Dec-96 99 100.0% 91.9% 92.9% 98.0%
Village Apartments May-00 210 96.7% 96.2% 96.2% 81.4%
Village at Stone Mountain Oct-97 722 88.9% 86.1% 92.5% 95.3%
Village Green Feb-00 200 87.0% 89.5% 88.5% 93.5%
Weatherstone Sep-00 100 86.0% 87.0% 54.0% N/A
Western Hills Dec-98 80 76.3% 80.0% 98.0% 97.5%
Willow Key Mar-99 384 95.8% 96.1% 98.4% 99.0%
Woodglen Dec-99 250 82.4% 86.0% 93.2% 81.2%
Woodmark Jun-99 173 97.7% 96.5% 97.7% 96.0%
--------
Subtotal Mortgage Bonds 9,149
--------
Participating Subordinate Mortgage Bonds:
Barkley Place May-87 156 98.7% 94.2% 91.7% 93.6%
Gilman Meadows Mar-87 125 91.2% 93.6% 93.6% 91.2%
Hamilton Chase Feb-87 300 91.7% 91.7% 97.7% 97.3%
Mallard Cove I & II Feb-87 198 94.4% 96.5% 85.9% 98.0%
Meadows Jan-88 200 91.0% 95.0% 93.0% 90.5%
Montclair Oct-86 159 92.5% 93.1% 91.8% 93.7%
Newport Village Dec-86 220 85.5% 88.2% 95.0% 98.6%
Nicollet Ridge Dec-87 339 90.6% 94.4% 90.6% 95.6%
Riverset II Jan-96 148 90.0% 92.2% 89.2% 92.0%
Steeplechase Oct-88 450 94.0% 93.8% 98.7% 94.4%
Whispering Lake Oct-87 384 90.4% 88.5% 93.8% 88.3%
--------
Subtotal Participating Subordinate Mortgage Bonds 2,679
--------
Avg. Monthly Rent
Per Apartment Unit
----------------------------------------------
Month Month Month Month
Ended Ended Ended Ended
Month/Year Apartment February 28, Dec. 31, March 31, March 31,
Apartment Community Acquired Units 2003 2002 2002 2001
--------------------- ----------- --------- ----------------------------------------------
Participating Mortgage Bonds:
Alban Place Sep-86 194 920 955 920 862
Cobblestone Aug-99 184 580 573 568 553
Creekside Village Nov-87 296 554 582 543 508
Crossings Jan-97 200 757 749 745 724
Jefferson Commons Dec-00 173 1,280 1,261 1,362 1,253
Lakeview Sep-87 180 711 703 687 676
North Pointe Sep-86 540 713 701 674 639
Timber Ridge Dec-00 168 496 497 496 489
Villas at LaRiviera Jun-99 199 704 708 665 600
--------
Subtotal Participating Mortgage Bonds 2,134
--------
Mortgage Bonds
Applewood (a.k.a. Paola) Jul-99 48 518 517 499 514
Buchanan Bay Mar-01 228 716 716 682 680
Charter House (2) Dec-96 ---- N/A N/A N/A N/A
Cielo Vista Aug-99 378 387 388 423 428
Country Club Jul-99 101 445 440 443 370
Delta Village Jun-99 80 581 581 570 539
Elmbrooke Aug-00 54 1,103 1,021 1,021 716
Florida A&M Feb-00 96 1,378 1,377 1,390 1,352
Gannon (Dade) (3) Feb-98 799 758 755 739 707
Gannon (St. Louis) Feb-98 336 585 581 562 545
Hidden Valley Dec-96 82 557 601 543 538
Honey Creek Mar-99 656 546 550 561 538
Hunter's Glen Mar-01 383 580 580 569 552
Lake Piedmont Apr-98 648 486 483 473 462
Monroe (Oakmont, Towne Oak) Dec-98 364 488 487 480 462
Mountain View (Willowgreen) Nov-86 241 642 640 625 592
Northridge Park II Aug-87 128 1,017 1,023 1,040 979
Oakbrook Dec-96 170 452 449 427 446
Oklahoma City (4) Aug-98 774 487 485 478 487
Orangevale Apr-98 64 968 973 957 915
Parkwood Jun-99 180 475 473 460 442
Riverset II (1) Jan-96 ---- N/A N/A N/A N/A
Riverview Jun-00 228 653 657 649 N/A
Sahuarita Jun-99 52 551 551 553 536
Santa Fe Springs Jun-00 310 605 595 594 585
Shadowbrook Jun-99 193 494 483 477 456
Silver Springs Dec-99 250 773 777 792 790
Southwind Aug-00 88 716 713 685 639
Torries Chase Dec-96 99 514 511 494 488
Village Apartments May-00 210 568 568 492 489
Village at Stone Mountain Oct-97 722 760 759 725 710
Village Green Feb-00 200 633 635 637 627
Weatherstone Sep-00 100 801 804 812 N/A
Western Hills Dec-98 80 515 507 502 497
Willow Key Mar-99 384 696 684 646 624
Woodglen Dec-99 250 668 664 635 652
Woodmark Jun-99 173 680 680 697 672
--------
Subtotal Mortgage Bonds 9,149
--------
Participating Subordinate Mortgage Bonds:
Barkley Place May-87 156 2,075 2,056 2,111 2,029
Gilman Meadows Mar-87 125 1,011 1,016 1,020 989
Hamilton Chase Feb-87 300 622 622 611 597
Mallard Cove I & II Feb-87 198 715 717 761 720
Meadows Jan-88 200 607 605 606 599
Montclair Oct-86 159 1,842 1,844 1,803 1,789
Newport Village Dec-86 220 844 839 832 789
Nicollet Ridge Dec-87 339 953 937 942 899
Riverset II Jan-96 148 714 708 699 705
Steeplechase Oct-88 450 608 606 591 584
Whispering Lake Oct-87 384 651 648 643 648
--------
Subtotal Participating Subordinate Mortgage Bonds 2,679
--------
Occupancy
--------------------------------------------------
Month Ended Month Ended Month Ended Month Ended
Month/Year Apartment March 31, Dec. 31, March 31, March 31,
Apartment Community Acquired Units 2003 2002 2002 2001
--------------------- ----------- --------- --------------------------------------------------
Subordinate Mortgage Bonds:
CAPREIT Sep-99 ---- N/A N/A N/A N/A
Cinnamon Ridge Jan-99 ---- N/A N/A N/A N/A
Farmington Meadows Aug-99 69 98.6% 100.0% 98.6% 100.0%
Independence Ridge Aug-96 336 71.1% 71.1% 83.6% 84.5%
Locarno Aug-96 110 86.4% 91.8% 93.6% 90.0%
Olde English Manor Nov-99 ---- N/A N/A N/A N/A
Peaks of Conyer Sep-01 260 85.0% 87.7% 89.2% N/A
Rillito Village Jul-00 ---- N/A N/A N/A N/A
Winter Oaks Nov-99 460 95.4% 94.3% 91.5% 92.6%
--------
Subtotal Subordinate Mortgage Bonds 1,235
--------
Other Bond Related Investments:
Briarwood Dec-98 600 94.8% 95.0% 98.7% 95.2%
Cinnamon Ridge Dec-97 264 92.8% 92.4% 97.0% 95.5%
Golfside Villas (f.k.a. Club West) Mar-99 194 99.0% 98.9% 100.0% 99.5%
Park at Landmark Sep-00 396 94.2% 97.0% 97.0% 97.7%
Poplar Glen Jun-97 191 93.7% 96.3% 99.0% 93.2%
RITES - Charter House Dec-96 280 93.2% 91.4% 91.1% 95.7%
RITES - Indian Lakes Jul-97 296 73.0% 79.4% 84.5% 85.8%
RITES - LaPaloma Apr-99 120 100.0% 98.3% 98.3% 98.3%
RITES - LeMirador (Coleman Senior) Apr-98 141 89.4% 90.1% 98.6% 99.3%
RITES - Museum Towers Apr-01 286 94.1% 94.1% 88.5% 96.9%
RITES - Olde English Manor Jun-98 264 82.2% 93.9% 92.8% 95.5%
RITES - Palisades Park Feb-98 304 96.4% 92.8% 98.4% 98.4%
RITES - Pavillion Apr-99 132 99.2% 100.0% 99.2% 99.2%
RITES - Queen Anne IV Jul-98 110 82.7% 90.0% 99.1% 96.4%
RITES - Rancho/Villas May-00 417 86.6% 89.8% 94.5% 94.1%
RITES - Rillito Village Aug-98 272 91.2% 89.0% 93.4% 90.8%
RITES - Riverset (1) Aug-88 352 90.0% 92.2% 89.2% 92.0%
RITES - Riverset II (1) Jan-96 ---- N/A N/A N/A N/A
RITES - Sienna (a.k.a. Italian Gardens) Apr-98 140 91.4% 87.9% 97.1% 100.0%
RITES - Sonterra May-98 156 90.4% 92.3% 80.8% 80.1%
RITES - Southgate Crossings Jun-97 215 94.0% 94.0% 95.8% 97.7%
RITES - Southwood Nov-97 1,286 74.2% 79.4% 84.0% 81.6%
--------
Subtotal Other Bond Related Investments 6,416
--------
Total Units/Weighted Average Investments 21,613 90.4% 90.9% 92.2% 92.0%
========
Total/Same Stores (5) 2000 21,025 90.5% 90.9% 92.9% 92.0%
Total/Same Stores (5) 2001 21,613 90.4% 90.9% 92.2%
Construction/Substantial Rehab Properties and Other Investments
Arlington Dec-00 176 31.8% 24.4% N/A N/A
Autumn Oaks/Crest at Thousand Oaks Feb-03 410 N/A N/A N/A N/A
Barrington at Beach Street Oct-00 398 58.0% 53.0% 28.6% N/A
Bedford Park Oct-00 312 64.1% 64.1% 74.4% 45.5%
CAPREIT Joint Venture (6) Jun-02 6,279 94.2% 93.5% 95.0% N/A
CAPREIT TERA (7) Mar-01 2,942 93.8% 93.0% 92.4% N/A
Chancellor Nov-01 101 N/A N/A N/A N/A
Chancellor II Mar-02 46 N/A N/A N/A N/A
City Views at Rosa Burney Park Dec-02 180 N/A N/A N/A N/A
Cool Springs Aug-00 124 53.2% 51.6% 21.8% N/A
Coronel Village Apr-02 48 N/A N/A N/A N/A
Fort Branch Dec-00 250 69.2% 60.8% N/A N/A
Hidden Brooks Sep-01 201 84.6% 85.6% 80.1% N/A
Jefferson at Town Lake Dec-02 216 N/A N/A N/A N/A
Las Trojas Mar-02 49 N/A N/A N/A N/A
Liberty Park Townhomes Feb-03 184 72.3% N/A N/A N/A
Lincoln Corner Dec-01 134 N/A N/A N/A N/A
Meridian at Bridgewater Nov-99 90 81.1% 86.7% 64.4% 10.0%
Mountain View Village Jun-02 220 N/A N/A N/A N/A
North White Road Nov-01 157 N/A N/A N/A N/A
Oak Grove Commons Dec-01 168 N/A N/A N/A N/A
Olathe Senior Residences Dec-02 144 N/A N/A N/A N/A
Osborne Place Manor Dec-02 50 N/A N/A N/A N/A
Penn Valley Dec-01 42 N/A N/A N/A N/A
Sanger Trails Dec-02 208 N/A N/A N/A N/A
Sycamore Senior Village Jun-02 300 N/A N/A N/A N/A
Village at Sun Valley May-00 276 89.1% 70.7% 49.6% N/A
Walnut Tree Mar-02 64 N/A N/A N/A N/A
--------
Subtotal Construction/Rehab Properties 13,769
--------
Total Units 35,382
========
Avg. Monthly Rent
Per Apartment Unit
-------------------------------------------------
Month Month Month Month
Ended Ended Ended Ended
Month/Year Apartment February 28, Dec. 31, March 31, March 31,
Apartment Community Acquired Units 2003 2002 2002 2001
--------------------- ----------- --------- -------------------------------------------------
Subordinate Mortgage Bonds:
CAPREIT Sep-99 ---- N/A N/A N/A N/A
Cinnamon Ridge Jan-99 ---- N/A N/A N/A N/A
Farmington Meadows Aug-99 69 814 814 814 814
Independence Ridge Aug-96 336 553 553 550 537
Locarno Aug-96 110 890 889 874 844
Olde English Manor Nov-99 ---- N/A N/A N/A N/A
Peaks of Conyer Sep-01 260 740 735 740 N/A
Rillito Village Jul-00 ---- N/A N/A N/A N/A
Winter Oaks Nov-99 460 550 558 549 542
--------
Subtotal Subordinate Mortgage Bonds 1,235
--------
Other Bond Related Investments:
Briarwood Dec-98 600 630 623 595 578
Cinnamon Ridge Dec-97 264 937 932 882 890
Golfside Villas (f.k.a. Club West) Mar-99 194 617 615 589 573
Park at Landmark Sep-00 396 1,090 1,084 1,070 968
Poplar Glen Jun-97 191 976 971 945 875
RITES - Charter House Dec-96 280 625 624 618 603
RITES - Indian Lakes Jul-97 296 786 800 768 751
RITES - LaPaloma Apr-99 120 670 629 630 595
RITES - LeMirador (Coleman Senior) Apr-98 141 834 834 816 736
RITES - Museum Towers Apr-01 286 1,363 1,363 1,350 1,308
RITES - Olde English Manor Jun-98 264 492 488 476 467
RITES - Palisades Park Feb-98 304 553 551 537 508
RITES - Pavillion Apr-99 132 666 652 661 619
RITES - Queen Anne IV Jul-98 110 1,115 1,102 1,091 981
RITES - Rancho/Villas May-00 417 547 545 538 483
RITES - Rillito Village Aug-98 272 460 444 440 455
RITES - Riverset (1) Aug-88 352 694 698 693 696
RITES - Riverset II (1) Jan-96 ---- N/A N/A N/A N/A
RITES - Sienna (a.k.a. Italian Gardens) Apr-98 140 810 810 817 735
RITES - Sonterra May-98 156 863 857 845 864
RITES - Southgate Crossings Jun-97 215 987 987 951 901
RITES - Southwood Nov-97 1,286 494 500 490 483
--------
Subtotal Other Bond Related Investments 6,416
--------
Total Units/Weighted Average Investments 21,613 689 687 677 653
========
Total/Same Stores (5) 2000 21,025 688 687 675 653
Total/Same Stores (5) 2001 21,613 689 687 677
Construction/Substantial Rehab Properties and Other Investments
Arlington Dec-00 176 1,388 1,388 N/A N/A
Autumn Oaks/Crest at Thousand Oaks Feb-03 410 N/A N/A N/A N/A
Barrington at Beach Street Oct-00 398 804 805 842 N/A
Bedford Park Oct-00 312 533 530 515 458
CAPREIT Joint Venture (6) Jun-02 6,279 N/A 755 N/A N/A
CAPREIT TERA (7) Mar-01 2,942 N/A 618 636 N/A
Chancellor Nov-01 101 N/A N/A N/A N/A
Chancellor II Mar-02 46 N/A N/A N/A N/A
City Views at Rosa Burney Park Dec-02 180 N/A N/A N/A N/A
Cool Springs Aug-00 124 1,919 1,932 1,947 N/A
Coronel Village Apr-02 48 N/A N/A N/A N/A
Fort Branch Dec-00 250 737 806 836 N/A
Hidden Brooks Sep-01 201 1,034 1,024 1,069 N/A
Jefferson at Town Lake Dec-02 216 N/A N/A N/A N/A
Las Trojas Mar-02 49 N/A N/A N/A N/A
Liberty Park Townhomes Feb-03 184 358 N/A N/A N/A
Lincoln Corner Dec-01 134 N/A N/A N/A N/A
Meridian at Bridgewater Nov-99 90 N/A 3,496 3,496 3,576
Mountain View Village Jun-02 220 N/A N/A N/A N/A
North White Road Nov-01 157 N/A N/A N/A N/A
Oak Grove Commons Dec-01 168 N/A N/A N/A N/A
Olathe Senior Residences Dec-02 144 N/A N/A N/A N/A
Osborne Place Manor Dec-02 50 N/A N/A N/A N/A
Penn Valley Dec-01 42 N/A N/A N/A N/A
Sanger Trails Dec-02 208 N/A N/A N/A N/A
Sycamore Senior Village Jun-02 300 N/A N/A N/A N/A
Village at Sun Valley May-00 276 675 683 641 N/A
Walnut Tree Mar-02 64 N/A N/A N/A N/A
--------
Subtotal Construction/Rehab Properties 13,769
--------
Total Units 35,382
========
(1) The Company owns a participating bond, a participating subordinate bond and
a RITES interest collateralized by the Riverset property.
(2) The Company owns a non-participating bond and a RITES interest
collateralized by the Charter House property.
(3) The Dade Gannon Portfolio represents five properties.
(4) The Oklahoma City Portfolio represents three properties.
(5) Same Store includes only properties reporting for all three quarters.
(6) CAPREIT Joint Venture represents twenty properties (not included previously
in CAPREIT Portfolio).
(7) The CAPREIT TERA Portfolio represents eleven properties.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this Report to be signed on its behalf by the
undersigned hereto duly authorized.
MUNICIPAL MORTGAGE & EQUITY, LLC
BY: /S/ William S. Harrison
---------------------------
Name: William S. Harrison
Title: Senior Vice President and
Chief Financial Officer
DATE: April 22, 2003
Exhibit 99.2
PRESS RELEASE Contact: Angela Richardson
FOR IMMEDIATE RELEASE Investor Relations
--------------------- (888)788-3863
MuniMae Reports 2003 First Quarter Results
-----------
25th Consecutive Increase in Dividend to Common Shares
BALTIMORE, MD, April 22, 2003 -- Municipal Mortgage & Equity, LLC (NYSE: MMA)
today reported net income allocated to common shares of $13.9 million for the
quarter ended March 31, 2003, a decrease of 7% as compared to the same period in
2002. Diluted earnings per share were $0.50 for the quarter, compared to $0.62
for the same period in 2002.
Cash Available for Distribution ("CAD"), the primary measure of the Company's
dividend paying ability, increased 16% for the quarter ended March 31, 2003
compared to the same period in 2002. CAD per common share increased 6% compared
to the same period in 2002. The Board of Directors raised the quarterly dividend
to common shares to $0.4450, an increase of 2% over the same period in 2002.
MuniMae Chairman and CEO Mark K. Joseph, commenting on the results, stated, "The
first quarter of every year has typically been the most difficult for us because
the funding and development approvals our clients need are concentrated in the
second half of the year. Given this, we are quite pleased to have increased our
CAD per share 6% while raising MuniMae's dividend for the 25th consecutive
quarter."
Summary Results - GAAP
----------------------
The table below summarizes the Company's results for the first quarter of 2003
and the prior-year period:
First Quarter
----------------------------------
2003 2002 Change
------ ------ --------
Net Income ($ millions) $13.9 $15.0 -7%
Net Income Allocated to Common $13.9 $14.9 -7%
Shares ($ millions)
Basic Earnings/Common Share ($) $0.51 $0.63 -19%
Diluted Earnings/Common Share ($) $0.50 $0.62 -19%
The attached condensed consolidated statements of income represent the GAAP
results of operations of the Company for the three-month periods ended March 31,
2003 and 2002.
Summary Results - CAD
----------------------
For the first quarter of 2003, CAD was $17.4 million and CAD to common shares
was $14.4 million. The 2003 first quarter per share distribution to common
shareholders of $0.4450 represents a payout ratio of 89%.(The Company uses CAD
as the primary measure of its current earnings and,consequently, its
distribution-paying ability. CAD differs from net income because of variations
between GAAP income and actual cash received. These variations are described in
the note to the attached calculation of CAD
statement.)
First Quarter
---------------------------------
2003 2002 Change
------ ------ ------
Total CAD ($ millions) $17.4 $15.0 16%
CAD to Common ($ millions) 14.4 11.8 22%
CAD per Common Share ($) 0.50 0.47 6%
A reconciliation of GAAP net income allocated to common shares to CAD to common
shares is attached.
First Quarter Distribution
--------------------------
MuniMae's first quarter distribution to common shareholders of $0.4450
annualizes to $1.78 per share. Based on yesterday's closing share price of
$24.63, MuniMae common shares have an annualized yield to shareholders of 7.2%.
Assuming the Company's income during the year is 85% exempt from Federal income
tax, and assuming a 38.6% tax bracket, the taxable equivalent yield, absent the
impact of capital gains, would be 11.1%.
About the Company
-----------------
MuniMae and its subsidiaries originate, service and asset manage investments in
multifamily debt and equity for its own account and on behalf of others. Assets
under management total $3.6 billion secured by 910 properties and 97,624 units
in 48 states and the U.S. Virgin Islands. For its proprietary accounts, MuniMae
primarily holds tax-exempt multifamily housing bonds. This on-balance sheet
portfolio of tax-exempt bonds is secured by 145 properties containing 35,382
units in 27 states. For a portion of bonds, MuniMae participates in the
performance of the underlying properties.
MuniMae is organized as a limited liability company. This structure allows
MuniMae to combine the limited liability, governance and management
characteristics of a corporation with the pass-through income features of a
partnership. As a result, the tax-exempt income derived from certain investments
remains tax-exempt when passed through to shareholders. Distributions to
shareholders are declared quarterly and paid in February, May, August and
November.
The calculation of Cash Available for Distribution is the basis for the
determination of the Company's quarterly distributions to common shares, is used
by securities analysts, and is presented as a supplemental measure of the
Company's performance. The calculation is not approved by the Securities and
Exchange Commission nor is it required by GAAP and should not be considered as
an alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flows as a measure of liquidity. The
Company believes that Cash Available for Distribution provides relevant
information about its operations and is necessary, along with net income, for
understanding its operating results.
This press release contains statements which are forward looking in nature and
reflect management's current views with respect to future events and financial
performance. These statements are subject to many uncertainties and risks and
should not be considered guarantees of future performance. Actual results may
vary materially from projected results based on a number of factors, including
the actual performance of the properties pledged as collateral for the
portfolio, general conditions in the local real estate markets in which the
properties are located and prevailing interest rates.
MUNIMAE: TAX-EXEMPT DIVIDENDS AND GROWTH THROUGH REAL ESTATE
www.munimaemidland.com
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
For the three months ended
March 31,
----------------------------------
2003 2002
---------------- ----------------
INCOME:
Interest income
Interest on bonds and residual interests in bond securitizations $ 15,985 $ 15,162
Interest on loans 9,503 8,430
Interest on short-term investments 192 487
---------------- ----------------
Total interest income 25,680 24,079
---------------- ----------------
Fee income
Syndication fees 1,411 1,618
Origination fees 698 1,089
Loan servicing fees 1,909 1,908
Asset management and advisory fees 1,076 867
Other income 2,197 1,145
---------------- ----------------
Total fee income 7,291 6,627
---------------- ----------------
Net gain on sales 1,278 2,166
---------------- ----------------
Total income 34,249 32,872
---------------- ----------------
EXPENSES:
Interest expense 10,368 8,972
Salaries and benefits 5,966 4,827
General and administrative 1,656 1,726
Professional fees 989 637
Amortization of mortgage servicing rights and other intangibles 389 318
---------------- ----------------
Total expenses 19,368 16,480
---------------- ----------------
Net holding gains on derivatives 2,873 3,112
Impairments and valuation allowances related to investments - (110)
Net losses from equity investments in partnerships (747) (323)
Income tax expense (68) (1,031)
Income allocable to preferred shareholders in a subsidiary company (2,994) (2,994)
---------------- ----------------
Net income $ 13,945 $ 15,046
================ ================
LESS:
Net income allocable to term growth shares - 153
---------------- ----------------
Net income allocated to common shares $ 13,945 $ 14,893
================ ================
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Basic earnings per common share $ 0.51 $ 0.63
================ ================
Weighted average common shares outstanding 27,342,870 23,584,635
Diluted earnings per share:
Diluted earnings per common share $ 0.50 $ 0.62
================ ================
Weighted average common shares outstanding 27,681,511 24,200,030
MUNICIPAL MORTGAGE & EQUITY, LLC
RECONCILIATION OF GAAP NET INCOME TO CASH AVAILABLE FOR DISTRIBUTION
(In thousands)
(unaudited)
Qtr Ended Qtr Ended
03/31/03 03/31/02
------------ ------------
INCOME:
Interest income
Interest on bonds and residual interests in bond
securitizations $ 15,985 $ 15,162
Interest on loans 9,503 8,430
Interest on short-term investments 192 487
------------ ------------
Total interest income 25,680 24,079
------------ ------------
Fee income
Syndication fees 1,411 1,618
Origination fees 698 1,089
Loan servicing fees 1,909 1,908
Asset management and advisory fees 1,076 867
Other income 2,197 1,145
------------ ------------
Total fee income 7,291 6,627
------------ ------------
Net gain on sales 1,278 2,166
------------ ------------
Total income 34,249 32,872
------------ ------------
EXPENSES:
Interest expense 10,368 8,972
Salaries and benefits 5,966 4,827
General and administrative 1,656 1,726
Professional fees 989 637
Amortization of mortgage servicing rights and other
intangibles 389 318
------------ ------------
Total expenses 19,368 16,480
------------ ------------
Net holding gains on derivatives 2,873 3,112
Impairments and valuation allowances related to investments - (110)
Net losses from equity investments in partnerships (747) (323)
Income tax expense (68) (1,031)
Income allocable to preferred shareholders in a subsidiary
company (2,994) (2,994)
------------ ------------
Net income $ 13,945 $ 15,046
============ ============
LESS:
Net income allocable to term growth shares - 153
------------ ------------
Net income allocated to common shares - GAAP Basis $ 13,945 $ 14,893
============ ============
Conversion to Cash Available for Distribution:
(1)Mark to market adjustments $ (2,873) $ (3,112)
(2)Equity investments 2,409 440
(3)Net gain on sales (327) (2,126)
(3)Amortization of capitalized mortgage servicing fees 352 318
(4)Origination fees and other income, net 282 673
(5)Valuation allowances and other-than-temporary impairments - 110
(6)Deferred tax expense 628 617
------------ ------------
Cash Available for Distribution (CAD) $ 14,416 $ 11,813
============ ============
Notes
-----
(1) For GAAP reporting, the Company records the non-cash change in fair
value of its investment in interest rate swaps and other derivative financial
instruments through net income. These non-cash gains and losses are not included
in the Company's calculation of CAD.
(2) For GAAP reporting, the Company accounts for various investments in
partnerships using the equity accounting method. As a result, the Company's
allocable share of the income or loss from the partnerships is reported in
income (losses) from equity investments in partnerships. The income from these
partnerships includes depreciation expense and changes in the fair value of
investments in derivatives. For GAAP reporting, distributions are treated as a
return of capital. For CAD reporting, the Company records the cash distributions
it receives from the partnerships as other income.
(3) For GAAP reporting, the Company recognizes non-cash gains and losses
associated with the sale of assets or capitalization of mortgage servicing
rights. The capitalized mortgage servicing rights are amortized into expense
over the estimated life of the serviced loans. The non-cash gains and the
associated amortization expense are not included in CAD.
(4) Origination fees and certain other income amounts are recognized as
income when received for CAD purposes, but for GAAP reporting these items are
deferred and amortized into income over the life of the associated investment.
This adjustment represents the net difference, for the relevant period, between
fees taken into income when received for CAD and the amortization of fees
recorded for GAAP.
(5) For GAAP reporting, the Company records valuation allowances and
other-than-temporary impairments on its investments in loans, bonds and other
bond-related investments. Such non-cash charges do not affect the cash flow
generated from the operation of the underlying properties, distributions to
shareholders, or the tax-exempt status of the income of the financial obligation
under the bonds. Therefore, these items are not included in the calculation of
CAD.
(6) For GAAP reporting, the Company's income tax expense contains both a
current and a deferred component. Only the Company's current income tax expense
is reflected in CAD.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(In thousands, except share and per share data)
(unaudited)
For the three months ended
March 31,
----------------------------------------
2003 2002
------------------ ------------------
SOURCES OF CASH:
Interest on bonds, residual interests in bond securitizations and loans $ 24,848 $ 22,963
Interest on short-term investments 192 487
Loan servicing fees 1,909 1,908
Origination and syndication fees 2,571 3,126
Other income 4,998 2,330
Net gain on sales 951 40
------------------ ------------------
TOTAL SOURCES OF CASH 35,469 30,854
------------------ ------------------
EXPENSES:
Interest expense 9,839 8,290
Salaries and benefits 5,966 4,827
Professional fees 989 637
General and administrative 1,825 1,726
Income taxes (560) 414
------------------ ------------------
TOTAL EXPENSES 18,059 15,894
------------------ ------------------
CASH AVAILABLE FOR DISTRIBUTION 17,410 14,960
------------------ ------------------
LESS:
Cash allocable to preferred shareholders in a subsidiary company
and term growth shares 2,994 3,147
------------------ ------------------
CASH AVAILABLE FOR DISTRIBUTION TO COMMON SHARES $ 14,416 $ 11,813
================== ==================
CAD PER COMMON SHARE $ 0.50 $ 0.47
================== ==================
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 14,416 $ 11,813
================== ==================
ACTUAL AMOUNT PAID $ 12,837 $ 10,968
================== ==================
PAYOUT RATIO 89.0% 92.8%
================== ==================
COMMON SHARES OUTSTANDING 28,846,327 25,213,482
================== ==================
CASH DISTRIBUTION PER COMMON SHARE $ 0.4450 $ 0.4350
================== ==================
CAD differs from net income because of variations between GAAP income and
actual cash received. There are three primary differences between CAD and GAAP
income. The first is the treatment of loan origination fees, which for CAD
purposes are recognized as income when received but for GAAP purposes are
amortized into income over the life of the associated investment. The second
difference is the non-cash gain and loss recognized for GAAP associated with
valuations, sales of investments and capitalization of mortgage servicing
rights, which are not included in the calculation of CAD. The third difference
is the treatment of the Company's investments in partnerships. For GAAP, the
Company records its allocable share of the income (loss) from the partnership as
income, while for CAD reporting, the Company records the cash distributions it
receives from the partnership as income.
CAD per common share is calculated based on the number of shares
outstanding at the end of each quarter. For GAAP, basic net income per share is
calculated based on the weighted average shares outstanding during the period.
The weighted average shares outstanding for diluted net income per share include
the potential dilutive effect from the exercise of options, vesting of
restricted shares, and provision for shares to be awarded under the Midland
acquisition earn out provision.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
March 31, December 31,
2003 2002
-------------- --------------
ASSETS:
Investment in tax-exempt bonds and residual interests
in bond securitizations $ 812,287 $ 781,384
Loans receivable, net 440,112 461,448
Investments in partnerships 98,756 99,966
Investment in derivative financial instruments 18,404 18,762
Cash, cash equivalents and interest receivable 65,986 59,902
Other assets 84,805 97,919
Goodwill 33,589 33,537
-------------- --------------
TOTAL $ 1,553,939 $ 1,552,918
============== ==============
LIABILITIES AND EQUITY:
Notes payable $ 381,073 $ 450,924
Short-term debt 219,590 219,945
Long-term debt 146,987 147,357
Residual interests in bond securitizations 1,438 1,447
Investment in derivative financial instruments 46,128 49,359
Current liabilities 31,052 36,357
Preferred shareholders' equity in a subsidiary company 160,465 160,465
Shareholders' equity 567,206 487,064
-------------- --------------
TOTAL $ 1,553,939 $ 1,552,918
============== ==============
EXHIBIT 99.3
PRESS RELEASE Contact: Angela Richardson
FOR IMMEDIATE RELEASE Investor Relations
--------------------- (888)788-3863
MuniMae Structures $154 Million of Multifamily Financing
And Raises $107 Million in Capital During First Quarter
BALTIMORE, MD, April 22, 2003 -- Municipal Mortgage & Equity, LLC (NYSE: MMA),
announced today that it structured $154 million of financing for multifamily
housing during the first quarter of 2003. In addition, the Company raised $35
million in tax credit equity and , as previously announced, $72 million in
common equity.
Mark K. Joseph, Chairman of the Board and CEO of MuniMae commented, "The equity
markets continue to be supportive of our business. We are appreciative that so
many parties have entrusted their equity funds with MuniMae. Our $154 million of
origination volume gives us a good start for 2003."
Mr. Joseph added, "As in past years, we expect production to be back-end loaded
with our output ramping up over the next three quarters to meet our 2003 goal of
$1.5 billion. This follows the affordable housing development cycle where tax
credits, state loans and tax-exempt bonds are usually awarded mid to late in the
year. As these allocations are awarded to our clients over the course of the
year, MuniMae will be there to serve their debt and equity needs."
Investment Activity Summary
---------------------------
Highlights of first quarter 2003 origination activity include:
First Quarter
Volume (in millions)
--------------------
Taxable Construction/Permanent Lending $ 75.8
Tax-exempt Bonds Construction/Permanent 32.1
Supplemental Loans 16.8
Equity Investments 29.1
------
Total $153.8
======
Capital Raising Activity Summary
--------------------------------
In the first quarter of 2003, the Company participated in two capital raising
transactions. First, a common equity offering raised net proceeds of $72
million, including the underwriters' over-allotment option, for future
investment opportunities. Second, the Company raised $35 million of tax credit
equity, representing a 9% increase over the same period in 2002, from four
third-party investors.
About the Company
-----------------
MuniMae and its subsidiaries originate, service and asset manage investments in
multifamily debt and equity for its own account and on behalf of others. Assets
under management total $3.6 billion secured by 910 properties and 97,624 units
in 48 states and the US Virgin Islands. For its proprietary accounts, MuniMae
primarily holds tax-exempt multifamily housing bonds. This on-balance sheet
portfolio of tax-exempt bonds is secured by 145 properties containing 35,382
units in 27 states. MuniMae participates, for a portion of the bonds, in the
performance of the underlying properties.
MuniMae is organized as a limited liability company, which makes it exempt from
tax at the corporate level and provides the benefit of corporate governance. In
addition, the Company passes through to its shareholders primarily tax-exempt
dividends, which are generated by its municipal bond investments. Dividends to
shareholders are declared quarterly and paid in February, May, August and
November.
This press release contains statements which are forward looking in nature and
reflect management's current views with respect to future events and financial
performance. These statements are subject to many uncertainties and risks and
should not be considered guarantees of future performance. Actual results may
vary materially from projected results based on a number of factors, including
the actual performance of the properties pledged as collateral for the
portfolio, general conditions in the local real estate markets in which the
properties are located and prevailing interest rates.
MUNIMAE: TAX-EXEMPT DIVIDENDS AND GROWTH THROUGH REAL ESTATE
www.munimaemidland.com