SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 27, 2003
Charter Municipal Mortgage Acceptance Company
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(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or other Jurisdiction of Incorporation)
1-13237 13-3949418
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(Commission File Number) (IRS Employer Identification Number)
625 Madison Avenue, New York, NY 10022
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code:
(212) 421-5333
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report
Item 9. Regulation FD Disclosure
------------------------
For the quarter and year ended December 31, 2002, Charter Municipal
Mortgage Acceptance Company ("CharterMac") hereby makes available its earnings
press release that was released today, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 99.1. CharterMac released this press
release on the Business Wire this morning and is posting a copy of this press
release on its web page at www.chartermac.com.
The information included in this Current Report on Form 8-K (including the
exhibit hereto) is furnished pursuant to Item 9 and shall not be deemed to be
"filed" for the purposes of Section 18 of the Securities Exchange Act of 1934,
as amended, or otherwise subject to the liabilities of that Section or Sections
11 and 12(a)(2) of the Securities Act of 1933, as amended. This Report
(including the exhibit hereto) will not be deemed an admission as to the
materiality of any information required to be disclosed solely to satisfy the
requirements of Regulation FD.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a). Financial Statements
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Not Applicable
(b). Pro Forma Financial Information
-------------------------------
Not Applicable
(c). Exhibits
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99.1 Press Release dated February 27, 2003, "Charter Municipal Mortgage
Acceptance Company Reports Fourth Quarter and Year-End Financial
Results; 9.6% Increase in Cash Available for Distribution Per Common
Share".
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Charter Municipal Mortgage Acceptance Company
(Registrant)
BY: /s/ Stuart J. Boesky
--------------------
Stuart J. Boesky
President
February 27, 2003
EXHIBIT 99.1
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY
REPORTS FOURTH QUARTER AND YEAR-END FINANCIAL RESULTS;
9.6% INCREASE IN CASH AVAILABLE FOR DISTRIBUTION PER COMMON SHARE
New York, NY - February 27, 2003 - Charter Municipal Mortgage Acceptance Company
("CharterMac" or the "Company") (AMEX: CHC) today announced financial results
for its fourth quarter and year ended December 31, 2002.
"CharterMac's financial performance remained extremely solid in 2002, having
grown our Cash Available for Distribution ("CAD") per share applicable to
shareholders by approximately 9.6% over 2001," commented Stuart Boesky,
President and Chief Executive Officer of CharterMac. "2002 was a year in which
the fundamentals of the affordable multifamily market remained strong, our core
business thrived, and our portfolio of revenue bonds continued to perform well.
In addition to providing over $1.2 billion of financing for multifamily housing,
we continued to diversify our revenue sources through the participation in a
credit enhancement transaction. We were extremely pleased to have concluded the
year with the announcement of the proposed acquisition of Related Capital
Company, which will enable us to internalize management and will create one of
the largest multifamily finance platforms in the nation."
Financial Highlights
--------------------
For the three and twelve months ended December 31, 2002, CharterMac's CAD
applicable to shareholders, a measure of dividend paying capability, was
approximately $16.4 million and $63.5 million, respectively. CharterMac's 2002
CAD results represent increases of approximately 27.1% and 51.9%, as compared
with approximately $12.9 million and $41.8 million for the three and twelve
months ended December 31, 2001, respectively. On a diluted per share basis, CAD
applicable to shareholders was $0.37 and $1.49 for the three and twelve months
ended December 31, 2002, respectively, representing an increase of approximately
9.6% compared to the twelve months ended December 31, 2001.
For the three and twelve months ended December 31, 2002, CharterMac had net
income applicable to shareholders of approximately $13.3 million and $56.3
million, respectively. CharterMac's net income applicable to shareholders for
the three and twelve months ended December 31, 2002, represent increases of
approximately 35.6% and 60.8%, as compared to net income applicable to
shareholders of approximately $9.8 million and $35.0 million for the three and
twelve months ended December 31, 2001, respectively. On a diluted per share
basis, net income applicable to shareholders was $0.30 and $1.32 for the three
and twelve months ended December 31, 2002, representing increases of
approximately 7.1% and 15.8% compared to the three and twelve months ended
December 31, 2001, respectively. For the three and twelve months ended December
31, 2002, CharterMac had total revenues of approximately $31.5 million and
$116.4 million. CharterMac's total revenues for the three and twelve months
ended December 31, 2002, represent increases of approximately 50.1% and 56.0%
compared to total revenues of approximately $21.0 million and $74.6 million for
the three and twelve months ended December 31, 2001, respectively.
Distribution Highlights
-----------------------
CharterMac increased its quarterly distribution twice during 2002, resulting in
a total annual distribution increase of approximately 6.7%. CharterMac's present
quarterly dividend on an annualized basis is $1.28 per share, which represents a
7.26% yield based upon the $17.62 per share closing price on February 26, 2003.
For the year ended December 31, 2002, CharterMac estimates that approximately
96% of its distributions to common shareholders were federally tax-exempt,
resulting in a taxable equivalent yield of approximately 11.65% for a
shareholder in a 38.6% tax bracket.
Revenue Bond Investments
------------------------
During the three months ended December 31, 2002, CharterMac acquired 23
tax-exempt revenue bonds and three taxable revenue bonds. In addition to the
revenue bonds, CharterMac originated three forward funding commitments and
funded three revenue bonds previously acquired for financings totaling
approximately $224 million in bond par value. These financings were secured by
19 affordable multifamily housing properties aggregating 3,783 units. For the
twelve months ended December 31, 2002, CharterMac originated, acquired, or
financed revenue bonds aggregating approximately $503 million in bond par value,
secured by over 9,500 units of multifamily housing, representing an approximate
70% increase over the face amount of the revenue bonds acquired in 2001.
As of December 31, 2002, CharterMac had direct and indirect ownership interests
in 210 taxable and tax-exempt first mortgage revenue bonds and tax-exempt
subordinate revenue bonds with a fair value of approximately $1.6 billion,
secured by mortgages on over 32,500 multifamily housing units in 25 states and
the District of Columbia. The tax-exempt first mortgage revenue bonds had a
weighted average interest rate of 7.17%, a weighted average maturity of 33
years, and a weighted average pre-payment lockout of 12 years.
PW Funding Inc.
---------------
For the three months ended December 31, 2002, PW Funding Inc. ("PWF"),
CharterMac's subsidiary, originated approximately $260.5 million of loans on
behalf of Fannie Mae, Freddie Mac, and the Federal Housing Authority, as well as
banks and insurance companies. Total loan originations for the twelve months
ended December 31, 2002, were approximately $698.9 million. As of December 31,
2002, PWF serviced a loan portfolio of $3.2 billion.
Commenting on PWF's origination activity, Mr. Boesky stated, "PWF's first year
as a subsidiary of CharterMac was very successful. A highlight of PWF's
origination volume in 2002 was that 81% of PWF's originations represented new
loans as opposed to portfolio refinancings. This added approximately $564
million of new servicing to its loan portfolio. Another bright spot in PWF's
originations for 2002 was its increased originations in affordable multifamily
housing, a fact we attribute to the synergies that are continuing to be realized
between PWF, CharterMac, and Related Capital."
Guaranteed Tax Credit Transaction
---------------------------------
In July 2002, CharterMac, taking advantage of the Company's industry expertise,
announced that it had participated in a transaction to guarantee tax benefits to
an investor in a partnership designed to generate low-income housing tax credits
("LIHTC"). As part of the transaction, CharterMac agreed to back an "AA-" rated
financial institution's obligation to guarantee an agreed upon internal rate of
return ("IRR") to the investor in Related Capital Guaranteed Corporate Partners
II, L.P. The transaction was structured as two separate guarantees, one
primarily guaranteeing the IRR through the lease-up phase of the properties and
the other guaranteeing the IRR through the operating phase of the properties.
This transaction, which was immediately accretive to CAD, was another example of
CharterMac's ability to diversify its revenue sources through creative and
well-structured transactions.
Capital Markets Highlights
--------------------------
"During 2002, CharterMac continued to demonstrate a consistent ability to access
the capital markets at favorable pricing, accessing the equity capital markets
four times during the course of the year and issuing over $178.6 million in
common and preferred equity to retail and institutional investors," said Stuart
Rothstein, Chief Financial Officer of CharterMac.
In addition, CharterMac issued approximately $130 million of debt in 2002
through both its Private Label Tender Option Program and through the Merrill
Lynch P-FLOATsSM/RITESSM Program. CharterMac continued to benefit from the low
interest rate environment and enjoyed an average annual cost of debt for 2002 of
approximately 2.4% before the effects of hedging.
Acquisition of Related Capital Company
--------------------------------------
In December 2002, nearly a year after forming a Special Committee of the Board
of Trustees to explore strategic alternatives for managing the Company,
CharterMac announced that it had entered into an agreement to acquire 100% of
the ownership interests of Related Capital Company ("RCC") and substantially all
of the businesses operated by RCC, one of the nation's leading full-service
financial services providers for the multifamily housing industry. The
acquisition will enable CharterMac to terminate its outside management agreement
with Related Charter, LP (the "Manager"), an affiliate of RCC, and to
internalize management.
CharterMac's Board of Trustees and management believe that the acquisition and
the internalization of management will enhance shareholder value through: (i)
the diversification of the Company's revenue sources; (ii) the elimination of
perceived conflicts of interest; (iii) the expansion of access to capital; (iv)
the creation of a more efficient cost structure for future growth; and (v) the
further alignment of interests of management and shareholders.
The acquisition, together with other related proposals to amend CharterMac's
trust agreement and its share option plan in connection with the acquisition,
are subject to approval by CharterMac's common shareholders, as well as other
customary closing conditions. The complete terms of the proposed acquisition and
an opinion from Dresdner Kleinwort Wasserstein, the Special Committee's
financial advisor, will be set forth in the proxy statement to be mailed to
shareholders following any required regulatory review. The transaction will be
voted upon by CharterMac shareholders at a special shareholder meeting.
Management Conference Call
--------------------------
Management will conduct a conference call today to review the Company's fourth
quarter and year-end financial results for the period ended December 31, 2002.
The conference call is scheduled for 11:00 a.m. Eastern Time. Callers will be
invited to ask questions. Investors, brokers, analysts, and shareholders wishing
to participate should call (800) 967-7185. For interested individuals unable to
join the conference call, a replay of the call will be available through
Thursday, March 6, 2003, at (888) 203-1112 (Passcode 613323) or on our website,
www.chartermac.com, through Thursday, March 13, 2003.
Supplemental Financial Information
----------------------------------
For more detailed financial information, please access the Supplemental
Financial Package, which is available in the Investor Relations section of the
CharterMac website at www.chartermac.com.
About the Company
-----------------
CharterMac is one of the nation's leading full-service multifamily finance
companies, providing capital solutions to developers and owners of multifamily
rental housing throughout the country. CharterMac's current revenue bond
portfolio includes direct and indirect interests in revenue bonds secured by
approximately 32,500 units of multifamily housing in 25 states and the District
of Columbia.
For more information, please visit CharterMac's website at www.chartermac.com or
contact the Shareholder Services Department directly at (800) 831-4826.
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31,
---------------------------
2002 2001
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ASSETS
Revenue Bonds-at fair value $ 1,579,990 $ 1,137,715
Investment in ARCap 19,054 18,950
Guaranteed investment contracts 19,642 18,406
Temporary investments 5,400 --
Mortgage servicing rights 35,595 33,708
Cash and cash equivalents 55,227 105,364
Cash and cash equivalents-restricted 5,257 4,670
Interest receivable, net 9,020 6,458
Promissory notes and mortgages receivable 53,278 45,022
Deferred costs, net 46,277 34,666
Goodwill, net 4,793 9,842
Other intangible assets, net 11,316 3,154
Other assets 6,003 3,104
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Total assets $ 1,850,852 $ 1,421,059
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Financing arrangements $ 671,659 $ 541,796
Notes payable 68,556 56,586
Interest rate derivatives 5,504 2,958
Accounts payable, accrued expenses and other liabilities 12,737 13,820
Deferred Income 6,582 2,870
Due to Manager and Affiliates 4,126 2,266
Due to FNMA 19,642 18,406
Distributions payable to preferred shareholders
of subsidiary 4,724 3,693
Deferred tax liability 10,790 10,251
Distributions payable to convertible CRA shareholders 1,125 565
Distributions payable to common shareholders 13,171 10,448
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Total liabilities 818,616 663,659
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Preferred shares of subsidiary (subject to mandatory
repurchase) 273,500 218,500
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Minority interest in consolidated subsidiary 4,822 3,652
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Commitments and contingencies
Shareholders' equity:
Beneficial owners' equity - Convertible CRA
shareholders (3,835,002 and 1,882,364 shares, issued
and outstanding in 2002 and 2001 respectively) 58,198 25,522
Beneficial owner's equity-manager 1,125 1,069
Beneficial owners' equity-other common shareholders
(100,000,000 shares authorized; 41,168,618 issued and
41,160,218 outstanding and 34,834,308 issued and
34,825,908 outstanding in 2002 and 2001, respectively) 604,860 511,456
Treasury shares of beneficial interest (8,400 shares) (103) (103)
Accumulated other comprehensive income (loss) 89,834 (2,696)
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Total shareholders' equity 753,914 535,248
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Total liabilities and shareholders' equity $ 1,850,852 $ 1,421,059
============ ===========
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)
Three Months Ended Twelve Months Ended
---------------------------- ----------------------------
12/31/02 12/31/01 12/31/02 12/31/01
------------ ------------ ------------ ------------
Revenues:
Interest income:
Revenue Bonds $ 24,917 $ 19,980 $ 92,681 $ 71,500
Temporary investments 195 393 1,293 1,279
Promissory notes 220 525 709 1,184
Mortgage banking fees 2,066 -- 5,710 --
Mortgage servicing fees 2,059 -- 7,971 --
Other income 2,009 71 8,049 662
------------ ------------ ------------ ------------
Total revenues 31,466 20,969 116,413 74,625
------------ ------------ ------------ ------------
Expenses:
Interest expense 4,968 3,327 15,823 13,641
Recurring fees relating to the Private
Label Tender Option Program 892 733 3,181 2,491
Bond servicing 1,011 699 3,530 2,454
General and administrative 5,258 759 20,976 2,755
Amortization 2,867 243 8,891 865
Loss on impairment of assets -- -- 532 400
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Total expenses 14,996 5,761 52,933 22,606
------------ ------------ ------------ ------------
Income before gain (loss) on repayment
of Revenue Bonds, sale of loans and
equity in earnings of ARCap 16,470 15,208 63,480 52,019
Equity in earnings of ARCap 554 456 2,219 456
Gain on sales of loans 2,812 -- 10,683 --
Gain (loss) on repayment of Revenue Bonds (94) (1,013) 3,885 (912)
------------ ------------ ------------ ------------
Income before allocation to preferred
shareholders of subsidiary and
minority interest 19,742 14,651 80,267 51,563
Income allocated to minority interest (119) -- (496) --
Income allocated to preferred
shareholders of subsidiary (4,725) (3,693) (17,266) (12,578)
------------ ------------ ------------ ------------
Income before provision for income taxes 14,898 10,958 62,505 38,985
Provision for income taxes (302) -- (1,284) --
------------ ------------ ------------ ------------
Net income $ 14,596 $ 10,958 $ 61,221 $ 38,985
============ ============ ============ ============
Allocation of net income to:
Special distribution to Manager $ 1,250 $ 1,028 $ 4,872 $ 3,621
============ ============ ============ ============
Manager $ 13 $ 99 $ 56 $ 354
============ ============ ============ ============
Common shareholders $ 12,256 $ 8,995 $ 52,911 $ 32,559
Convertible CRA Shareholders 1,077 835 3,382 2,452
------------ ------------ ------------ ------------
Total for shareholders $ 13,333 $ 9,830 $ 56,293 $ 35,011
============ ============ ============ ============
Net income per share:
Basic $ 0.30 $ 0.28 $ 1.32 $ 1.14
============ ============ ============ ============
Diluted $ 0.30 $ 0.28 $ 1.32 $ 1.14
============ ============ ============ ============
Weighted average shares
outstanding:
Basic 44,676,079 35,113,134 42,697,195 30,782,161
============ ============ ============ ============
Diluted 44,752,197 35,174,365 42,768,139 30,837,340
============ ============ ============ ============
CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES CALCULATION OF
CASH AVAILABLE FOR DISTRIBUTION
(Dollars in thousands except per share amounts)
Three Months Ended Twelve Months Ended
---------------------------- ----------------------------
12/31/02 12/31/01 12/31/02 12/31/01
------------ ------------ ------------ ------------
Sources of cash
Revenue bonds $ 24,917 $ 19,980 $ 92,681 $ 71,500
Temporary investments 195 393 1,293 1,279
Promissory notes 220 525 709 1,184
Equity in earnings of ARCap 554 456 2,219 456
Other 2,009 71 8,049 662
PWF Gains on Sale of Loans 214 -- 1,596 --
Mortgage servicing fees 2,059 -- 7,971 --
Mortgage banking fees 2,066 -- 5,710 --
CAD Adjustments 2,035 1,677 8,436 4,299
------------ ------------ ------------ ------------
Total sources of cash 34,271 23,102 128,664 79,380
------------ ------------ ------------ ------------
Uses of cash
Total expenses 14,996 5,761 52,933 22,606
Income allocated to Preferred
Shareholders of Subsidiaries 4,725 3,693 17,266 12,578
CAD tax adjustment -- -- 558 --
Less:
Amortization included in expenses (2,867) (243) (8,891) (865)
Non-cash compensation (176) -- (674) --
Loss on impairment of revenue bonds -- -- (532) (400)
Compensation cost - stock options (12) -- (383) --
------------ ------------ ------------ ------------
Total Uses of Cash 16,666 9,211 60,277 33,919
------------ ------------ ------------ ------------
Cash Available for Distribution (A) 17,605 13,891 68,387 45,461
Less: Distributions to Manager (1,250) (1,028) (4,872) (3,621)
------------ ------------ ------------ ------------
Cash Available for Distributions to
Common and CRA Shareholders (CAD) $ 16,355 $ 12,863 $ 63,515 $ 41,840
============ ============ ============ ============
Weighted Average Shares (Basic) 44,676,079 35,113,134 42,697,195 30,782,161
============ ============ ============ ============
Weighted Average Shares (Diluted) 44,752,197 35,174,365 42,768,139 30,837,340
============ ============ ============ ============
CAD per Share (Basic) $ 0.37 $ 0.37 $ 1.49 $ 1.36
============ ============ ============ ============
CAD per Share (Diluted) $ 0.37 $ 0.37 $ 1.49 $ 1.36
============ ============ ============ ============
Reconciliation of Net Income to Cash Available for Distribution (CAD)
Three Months Ended Twelve Months Ended
---------------------------- ----------------------------
12/31/02 12/31/01 12/31/02 12/31/01
------------ ------------ ------------ ------------
Net Income allocated to Shareholders $ 13,333 $ 9,830 $ 56,293 $ 35,011
Revenues - Amortization 866 419 2,413 1,488
LIHTC guarantee fee (684) -- 2,279 --
Construction servicing fee 698 1,146 1,714 1,671
Forward commitment fees 900 -- 900 --
Straight line yield 220 265 1,191 971
Expenses - Amortization 2,867 242 8,891 865
Loss on impairment of revenue bond -- -- 532 400
Gain on sales of loans (2,504) 1,013 (12,972) 877
Tax adjustment 302 -- 726 --
Minority interest 119 -- 496 --
Other, net 240 (52) 1,052 522
------------ ------------ ------------ ------------
CAD to Common and CRA Shareholders $ 16,355 $ 12,863 $ 63,515 $ 41,805
============ ============ ============ ============
(A) CAD represents net income (computed in accordance with generally accepted
accounting principles ("GAAP")), excluding gains and losses or sales of loans or
repayment of revenue bonds, impairment losses and the effect of straight line
revenue recognition of interest income on revenue bonds with fixed changes in
interest rates, plus depreciation and amortization, plus cash fees received but
deferred in accordance with GAAP. Fees recognized for CAD but deferred for GAAP
purposes are generally earned over a period of time in connection with certain
of our product lines, such as credit enhancement and yield guarantees.
There is no generally accepted methodology for computing CAD, and the Company's
computation of CAD may not be comparable to CAD reported by other companies. CAD
does not represent net cash provided by operating activities determined in
accordance with GAAP and should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of the Company's
performance, as an alternative to net cash provided from operating activities
(determined in accordance with GAAP) as a measure of our liquidity, or as an
indication of our ability to make cash distributions.
Certain statements in this press release may constitute forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These statements are based on
management's current expectations and beliefs and are subject to a number of
factors and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. Such forward-looking
statements speak only as of the date of this press release. CharterMac expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to reflect any
change in CharterMac's expectations with regard thereto or change in events,
conditions, or circumstances on which any such statement is based.
With respect to the proposed transaction described above under the heading
"Acquisition of Related Capital Company", you should review the risk factors
contained in CharterMac's public filings and in the proxy materials that will be
filed and distributed to shareholders in connection with the approval of the
proposed acquisition for a discussion of the risks related to the proposed
acquisition and the ownership of CharterMac's common shares.
Important additional information will be filed with the SEC
-----------------------------------------------------------
CharterMac will be filing with the SEC and mailing to shareholders a proxy
statement in connection with the proposed transaction described above under the
heading "Acquisition of Related Capital Company". Investors and security holders
are urged to read the proxy statement because it will contain important
information. The proxy statement and other documents filed by CharterMac with
the SEC may be obtained when they become available free of charge at the SEC's
website (http://www.sec.gov), or from CharterMac by contacting the Shareholder
Services Department directly at (800) 831-4826.
CharterMac, and its trustees and officers, and Related Capital Company, and its
principals and officers, may be deemed to be "participants" in the solicitation
of proxies from CharterMac shareholders in connection with the acquisition.
These potential participants have interests in the acquisition, some of which
could differ from those of CharterMac's shareholders generally. Information
about the executive trustees and officers of CharterMac and Related Capital
Company, including such individuals' ownership of CharterMac, is contained in
CharterMac's Form 10-K for the year ended December 31, 2001, and in the proxy
statement for CharterMac's 2002 annual meeting of shareholders, each of which is
available at the SEC website listed above. Investors and security holders may
obtain additional information regarding the interests of such potential
participants by reading the proxy statement when it becomes available.