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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-23972
AMERICAN MORTGAGE ACCEPTANCE COMPANY
(Formerly American Mortgage Investors Trust)
(Exact name of registrant as specified in its charter)
Massachusetts 13-6972380
- ----------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- -------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Shares of Beneficial Interest, par value $.10 per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The approximate market value of the voting and non-voting common equity
held by non-affiliates of the Registrant as of March 9, 2001 was $39,923,541,
based on a price of $10.61 per share, the closing sales price for the
Registrant's shares of beneficial interest on the American Stock Exchange on
that date.
As of March 9, 2001 there were 3,838,630 outstanding shares of the
Registrant's shares of beneficial interest.
DOCUMENTS INCORPORATED BY REFERENCE
Part III: Those portions of the Registrant's Proxy Statement for Annual Meeting
of Shareholders to be held on June 14, 2001, which are incorporated into Items
10, 11, 12 and 13.
Index to exhibits may be found on page 37
Page 1 of 61
CAUTIONARY STATEMENT FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.
PART I
Item 1. Business.
General
American Mortgage Acceptance Company (formerly American Mortgage Investors
Trust) (together with its consolidated subsidiary, the "Company") was formed on
June 11, 1991 as a Massachusetts business trust for the primary purpose of
investing in government-insured mortgages and guaranteed mortgage-backed
certificates. The Company elected to be treated as a real estate investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code").
On April 6, 1999, the Company received the necessary consent from its
shareholders to approve proposals (the "Proposals") to, among other things,
restructure the Company from a closed-ended, finite-life REIT to a publicly
traded, open-ended, infinite-life operating REIT. In addition to restructuring
the Company, the Proposals, among other matters, permit the Company to modify
its investment objectives, to incur a specified amount of indebtedness and to
list the Company's shares on a national exchange.
Effective April 26, 1999, upon authorization by the Board of Trustees, the
Company's name was changed from American Mortgage Investors Trust to American
Mortgage Acceptance Company. The Company's shares of beneficial interest (the
"Shares") commenced trading on the American Stock Exchange on July 1, 1999 under
the symbol "AMC". As of December 31, 2000, there were 3,838,630 Shares
outstanding.
The Company's business plan as a publicly traded REIT focuses on three types of
mortgage products: 1) origination of participating FHA insured multifamily
mortgages, 2) origination of construction and permanent mortgage financing for
affordable multifamily housing pursuant to a new venture with Federal National
Mortgage Association ("Fannie Mae"), and 3) acquisition of direct and indirect
subordinated interests in commercial mortgage-backed securities.
The current composition of the Company's investment portfolio reflects the
Company's business plan and is not comparable to its investment portfolio prior
to April 1999. Furthermore, the Company is still in the process of implementing
its new business plan and, therefore, the current portfolio should not be
considered indicative of the composition of the portfolio that might be expected
in the future.
The Company is governed by a board of trustees comprised of two independent
trustees and one trustee who is affiliated with Related Capital Company
("Related"). The Company has engaged Related AMI Associates, Inc. (the
"Advisor"), an affiliate of Related, to manage its day-to-day affairs. The
Advisor has subcontracted with Related to provide the services contemplated.
Through the Advisor, Related offers the Company a core group of experienced
staff and executive management providing the Company with services on both a
full and part-time basis. These services include, among other things,
acquisition, financial, accounting, capital markets, asset monitoring, portfolio
management, investor relations and public relations services. The Company
believes that it benefits significantly from its relationship with Related,
since Related provides the Company with resources that are not generally
available to smaller-capitalized, self-managed companies.
The Company has entered into an agreement with Fannie Mae whereby the company
will provide first loss protection ("First Loss Obligation") on certain loans
originated by Fannie Mae pursuant to a Master Financing and Loss Sharing
Agreement (See Note 11 of the Company's financial statements). Through an
unconsolidated subsidiary, AMAC/FM Corporation ("AMAC/FM"), and pursuant to a
Guaranty and Security Agreement with Fannie Mae, the payment of the First Loss
Obligation is guaranteed and secured by AMAC/FM's pledge and grant to Fannie Mae
of a security interest on certain assets of AMAC/FM.
During January, 2001, all of the voting common stock of AMAC/FM, previously
owned by the Advisor, was purchased by the Company, the effect of which is to
make AMAC/FM a wholly owned subsidiary of the Company. This change was possible
due to a change in federal REIT legislation passed in December 1999, allowing
REITS to directly own taxable subsidiaries, beginning after the year 2000.
Mortgage Loans
Information relating to the Company's investments in Mortgage Loans as of
December 31, 2000 is as follows:
Date of
Invest-
ment/ Interest Amounts Advanced
Final Interest--------------------------- Outstanding Rental
Matu Rate on Total Loan Occu- Rates at
Descrip -rity Mortgage Mortgage Additional Amounts Balance pancy December
Property -tion Date Loan(A) Loans Loans(B) Advanced 12/31/00 3/4/01 31, 2000
- -------- -- ------------ ----------------- --------- -------- ------ --------
Columbiana 204 4/94 (D) $9,106,099 $563,000 $9,669,099 $9,563,501 93% 564-959
Lakes Apts. Apt. 11/35
Columbia, SC Units (C)
(J)
Stony Brook 125 12/95 7.75%- (I) 763,909 763,909 748,665 98.4% 895-1225
Village II Apt. 6/37 9.128%
Apts. Units (C) (E)
East
Haven,CT
Hollows Apts.184 4/00 7.875%- 3,564,064 1,549,200 5,113,264 4,927,740 (K) (K)
Greenville, Apt. 1/42 9.6083%
NC Units (F)
Elmhurst 313 6/00 8.0%- 7,694,310 2,874,000 10,568,310 10,087,809 (K) (K)
Village Apt. 1/42 9.3232%
Oveide, FL Units (G)
Reserve at 212 8/00 8.0%- 4,583,939 1,987,000 6,570,939 6,501,018 (K) (K)
Autumn Creek Apt. (J) 9.202%
Friendswood, Units (H)
TX
-------------------------------------------------------
Total $24,948,412 $7,737,109 $32,685,521 $31,828,733
=======================================================
(A) The minimum interest rate shown represents base interest, which is fully
insured by HUD ("Base Interest"). The additional interest rate represents
interest which is not contingent upon cash flow and is secured by partnership
interests in the partnerships which own the Developments ("Additional
Interest").
(B) Additional loans are non-interest bearing.
(C) The mortgages have terms of 40 years, subject to mandatory prepayment at any
time after 10 years and upon one year's notice.
(D) The interest rates for Columbiana are 7.9%-8.678% during the permanent loan
period and was 7.4% during the construction period. In addition to the interest
rate during the permanent loan period, the Company will be entitled to 25% of
the cash flow remaining after payment of 8.678% interest. The operations of
Columbiana had not been able to support the payment of Additional Interest for
the period October 1, 1997 through June 30, 1998 which amounted to $48,760.
Accordingly, the accrued interest income that was deemed doubtful of collection
was fully reserved and reversed from interest income from mortgage loans in the
fourth quarter of 1998. As a result of the Company's final advance and
conversion of the construction loan to a permanent loan during the second
quarter of 1999, Columbiana was able to repay construction period advances from
the developer as well as Additional Interest due to the Company through the
second quarter. As a result, the Additional Interest which had been fully
reserved was recorded as interest income in the second quarter of 1999.
(E) In addition to the interest rate, the Company is entitled to 40% of the cash
flow remaining after payment of Base and Additional Interest.
(F) The interest rates for Hollows Apartments are 9.6083% per annum during the
permanent loan period and 7.875% during the construction period. The Note rate
of 7.875% is fully insured by HUD, and is secured by a first mortgage deed of
trust. Payments in excess of the Note rate, up to a rate of 9.6083%, are secured
by a second mortgage deed of trust and are guaranteed until August 2004 by an
entity related to the general partner of the partnership which owns Hollows
Apartments. The principal balance of the Additional Loan is secured by a third
mortgage deed of trust. In addition to the interest rate during the permanent
loan period, the Company is entitled to 50% of cash flow, if any, remaining
after the payment of debt service and 25% of the sale or refinancing proceeds.
The total loan is comprised of the mortgage loan of $8,946,100 and the
additional loan of $1,549,200. As of December 31, 2000, $3,564,064 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in January, 2042, have 5-year lockouts against prepayment, and have
a prepayment penalty structure during the second 5-year period of the loans.
(G) The interest rates for Elmhurst Village are 9.3232% per annum during the
permanent loan period and 8% during the construction period. The Note rate of 8%
is fully insured by HUD, and is secured by a first mortgage deed of trust.
Payments in excess of the Note rate, up to a rate of 9.3232%, are secured by a
second mortgage deed of trust and are guaranteed until December 2004 by an
entity related to the general partner of the partnership which owns the Elmhurst
Village Apartments. The principal balance of the Additional Loan is secured by a
third mortgage deed of trust. In addition to the interest rate during the
permanent loan period, the Company is entitled to 50% of cash flow, if any,
remaining after the payment of debt service and 25% of the sale or refinancing
proceeds. The total loan is comprised of the mortgage loan of $21,748,200 and
the additional loan of $2,874,000. As of December 31, 2000, $7,694,310 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in January, 2042 and have 5-year lockouts against prepayment, as
well as a prepayment penalty structure during the second 5-year period of the
loans.
(H) The interest rates for the Reserve at Autumn Creek are 9.202% during the
permanent loan period and 8% during the construction period. The Note rate of 8%
is fully insured by HUD and is secured by a first mortgage deed of trust.
Payments in excess of the Note rate, up to a rate of 9.202%, are secured by a
second mortgage deed of trust and are guaranteed until January 2005 by an entity
related to the general partner of the partnership which owns The Reserve at
Autumn Creek. The principal balance of the Additional Loan is secured by a third
mortgage deed of trust. In addition to the interest rate during the permanent
loan period, the Company is entitled to 50% of cash flow, if any, remaining
after the payment of debt service and 25% of the sale or refinancing proceeds.
The total loan is compromised of the mortgage loan of $16,538,700 and the
additional loan of $1,987,000. As of December 31, 2000, $4,583,939 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in December 2041 and have 5 year lockouts against prepayment, as
well as a prepayment penalty structure during the second 5 year period of the
loans.
(I) The Company contributed the mortgage loan to capitalize AMAC/FM Corporation,
an unconsolidated subsidiary. The principal amount contributed was $8,404,092.
The Company retained the additional loan and the right to collect the additional
interest.
(J) Pledged as collateral in connection with a secured credit repurchase
facility with Nomura Asset Capital Corporation (See Note 6 of the Company's
financial statements).
(K) The Underlying Properties for these mortgages are currently under
construction.
GNMA Certificates
Information relating to the Company's investments in GNMA Certificates as of
December 31, 2000 is as follows:
Principal
Balances
at Fair Stated Final
Certificate Date 12/31/00 Value at Interest Payment
Seller Number Purchased Purchise Price Including 12/31/00
% Amount (Discount) Rate Date
------ --------- ---------- ----- ----
Bear Stearns & Co. 0355540 7/27/94 90.7500% $2,407,102 $2,284,046 $2,498,175 7.125% 3/15/2029
Malone Mortgage Co. 0382486 7/28/94 99.6250% 2,197,130 2,116,748 2,159,906 8.500 8/15/2029
SunCoast Capital Group, G22412 6/23/97 99.34375% 1,981,566 1,185,679 1,193,138 7.000 4/20/2027
Ltd. --------- --------- ---------
$6,585,798 $5,586,473 $5,851,219
-========= ========= -=========
Commercial Mortgage-Backed Security-Related Investment and Short Sale;
Investment in ARCap On September 30, 1999, the Company acquired from ARCap
Investors, ("ARCap"), a "BB+" rated subordinated commercial mortgage-backed
security ("CMBS") from a Chase Manhattan Bank-First Union Nation Bank Commercial
Mortgage Trust. The CMBS investment, which was purchased for $35,622,358, has a
face amount of $50,399,711 and an annual coupon rate of 6.4%. The Company
purchased the CMBS investment using cash and debt provided through the Bear
Stearns Repurchase Facility (see Repurchase Facilities below). In connection
with this acquisition, the Company entered into an agreement (the "Agreement")
with ARCap. Under the Agreement, the Company had the right to sell the CMBS
investment to ARCap and purchase a preferred equity position in ARCap, all based
on the then fair value of the CMBS investment. ARCap, incorporated in January
1999, invests primarily in subordinated CMBS. As of December 31, 2000, ARCap had
over $310 million in assets.
This investment was accounted for as a trading asset and carried at estimated
fair value, with changes in fair value included in earnings. Interest income was
accrued as it became receivable, and included accretion of discounts, computed
using the effective yield method, after considering estimated prepayments and
credit losses. The Company recognized gains on this investment totaling
$1,496,017 in 2000 and losses of $1,419,016 in 1999, due to mark-to-market
adjustments.
On September 30, 1999, in order to mitigate the potential income statement
effect of changes in the fair value of its CMBS investment caused by changes in
interest rates, the Company entered into a short sale involving the sale of a
U.S. Treasury Note with a face amount of $39,327,000 and an annual coupon rate
of 5.625% borrowed from Bear Stearns & Co., Inc. ("Bear Stearns"). On March 16,
2000, the Company replaced the borrowed security by purchasing such security
through Bear Stearns, and entered into an additional short sale contract
involving the sale of a U.S. Treasury Note with a face amount of $34,512,000 and
an annual coupon rate of 6.0% borrowed from Bear Stearns. On November 1, 2000,
the Company terminated the short sale in connection with its sale of the
associated CMBS investment. The Company earned $1,498,627 and $471,262 on short
sale proceeds held by Bear Stearns during 2000 and 1999, respectively (included
in interest income from temporary investments) and incurred interest of
$1,757,648 and 547,025 on its short sale contracts during 2000 and 1999,
respectively (included in interest expense. Short sale positions were carried at
estimated fair value, with changes in fair value included in earnings. The
Company recognized losses on these positions totaling $1,795,572 in 2000 and
gains of $1,201,317 in 1999 due to mark-to-market adjustments.
On November 1, 2000, the Company, in accordance with the Agreement, sold the
CMBS investment to ARCap and repaid its borrowing under the Bear Stearns
Repurchase Facility, closed out its short sale position (see below) and
purchased a preferred equity interest in ARCap in the face amount of
$20,000,000, with a preferred dividend rate of 12%. This preferred equity
interest was recorded at $19,640,637, representing the fair value of the CMBS
investment at the date of the transaction, less the Bear Stearns Repurchase
Facility repayment plus approximately $3.5 million in cash paid to ARCap.
Repurchase Facilities
On September 30, 1999, the Company entered into a repurchase facility with Bear
Stearns (the "Bear Stearns Repurchase Facility"), whereby Bear Stearns advanced
$19,568,000 in cash towards the purchase of the CMBS-related investment (see
Note 5). The Bear Stearns Repurchase Facility had a variable interest rate based
on the one-month LIBOR rate plus 1.5%, which is adjusted on the first day of
each month. The Bear Stearns Repurchase Facility was repaid November 1, 2000 in
connection with the CMBS sale discussed above.
Effective February 15, 2000, the Company entered into a $60 million FHA
repurchase facility (the "Nomura Repurchase Facility") with Nomura Asset Capital
Corporation. This agreement enables the Company to borrow up to 90% with a
qualified hedge or 80% without a qualified hedge of the fair market value of FHA
loans owned by the Company. The Nomura Repurchase Facility has a term of 364
days and bears interest at LIBOR plus 1.25%. As of December 31, 2000, the amount
outstanding under this facility was $7,138,940, and the interest rate was 7.87%.
This repurchase facility was renewed for $40 million in February 2001, for a
term of one year.
Effective February 15, 2000, the Company entered into a repurchase facility with
Nomura Securities International, Inc. (the "Nomura Securities Repurchase
Facility"). This agreement enables the Company to borrow up to 95% of the fair
market value of qualified mortgage securities owned by the Company. Generally,
borrowings bear interest at LIBOR plus 0.50%. As of December 31, 2000, the
amount outstanding under this facility was $5,517,000, the interest rate was
7.12%.
Loan Venture with Federal National Mortgage Association
The Company completed a loan venture with Federal National Mortgage Association
("Fannie Mae") which has agreed to fund the origination of $250 million of
Delegated Underwriter and Servicer loans for apartment properties that qualify
for low income housing tax credits under Section 42 of the Internal Revenue
Code. Fannie Mae is the nation's largest source of financing for home mortgages
and the largest investor in multifamily mortgages. Under the terms of the loan
venture, the Company will originate and contract for individual loans of up to
$6 million dollars each over a two-year period and will work with American
Property Financing, which will underwrite and service the loans for Fannie Mae.
Each property in the transaction will benefit from 9% low income housing tax
credits for no less than 90% of its units. The Company will guaranty a first
loss position of up to 10% of the pool of $250 million and will receive guaranty
and other fees. As of December 31, 2000, 4 loans totaling $4,937,511 have been
originated under this loan venture.
Competition
The Company competes with various financial institutions in each of its lines of
business. For CMBS investments, competitors include major financial institutions
that sponsor CMBS conduits, pension funds, REITs and finance companies that
specialize in CMBS investment management. The Company competes with banks and
quasi-governmental agencies such as Fannie Mae, Freddie Mac and HUD, as well as
their designated mortgagees, for multifamily loan product.
The Company's business is also affected by competition to the extent that
Underlying Properties from which it derives interest and, ultimately, principal
payments may be subject to rental rates and relative levels of amenities from
comparable neighboring properties.
Employees and Management
The Company does not directly employ anyone. All services are performed for the
Company by the Advisor and its affiliates. The Advisor receives compensation in
connection with such activities as set forth in Item 8, Financial Statements and
Supplementary Data, Item 11, Executive Compensation and Item 13, Certain
Relationships and Related Transactions. In addition, the Company reimburses the
Advisor and certain of its affiliates for expenses incurred in connection with
the performance by their employees of services for the Company in accordance
with the Declaration of Trust.
Information Regarding Other Companies Managed by Affiliates of the Advisor
On or about February 8, 2001, a complaint was filed in the New York Supreme
Court, County of New York, against the external adviser of Aegis Realty, Inc.
("Aegis"), a public company which, like the Company, is externally advised by
affiliates of the Manager. Also individually named in the suit were Messrs.
Boesky, Hirmes, Ross, Brenner, Allen and Fisch. Messrs. Boesky, Allen and Fisch
are trustees of the Company. Aegis was also named as a nominal defendant. The
action is entitled Paul v. The Related Companies, L.P., Index No. 01-600669, and
is purportedly a class and derivative action. On or about March 23, 2001 a
second action, entitled Schnipper v. Aegis Realty, Inc., Case No. 219736-V, was
filed in the Circuit Court for Montgomery County, Maryland against Aegis and
each of Aegis's five directors (Messrs. Boesky, Brenner, Hirmes, Allen and
Fisch). Schnipper is purportedly brought as a class action. Each of these two
actions challenges Aegis' proposed acquisition of a property portfolio and
development business owned by a third party, which transaction also involves the
acquisition by Aegis of its external advisor from affiliates of the Manager.
Each suit alleges that the defendants breached their fiduciary duty to the Aegis
stockholders by, among other things, committing Aegis to pay unwarranted fees
and other consideration to affiliates of the Manager. The actions seek money
damages, injunctive and declaratory relief and attorneys' fees. The transaction
at issue in each suit, however, was approved by Aegis' independent directors
(Messrs. Allen and Fisch), who first obtained legal advice and two fairness
opinions from nationally recognized investment banking firms before approving
those transactions. Additionally, the transaction at issue is subject to Aegis
stockholders approval and will be submitted for a vote of the Aegis stockholders
after proxy materials describing that transaction are disseminated to the Aegis
stockholders. The defendants have advised the Company that they intend to defend
both actions vigorously. With respect to the allegations in the lawsuits, the
defendants have advised that they continue to believe that the transaction is
fair and reasonable and in the best interests of Aegis and its stockholders and
will be submitted for approval by a vote of the Aegis stockholders.
The Company believes the lawsuit against Aegis will not have a material impact
on the Company's operations or financial condition.
Item 2. Properties.
The Company does not own or lease any properties.
Item 3. Legal Proceedings.
The Company is not a party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Shareholders.
None.
PART II
Item 5. Market for the Registrant's Common Stock and Related Shareholder
Matters.
As of March 9, 2001, there were 273 registered shareholders owning 3,838,630
Shares. The Company's Shares have been listed on the American Stock Exchange
since July 1, 1999 under the symbol "AMC". Prior to July 1, 1999, there was no
established public trading market for the Company's Shares.
The high and low prices for each quarterly periods in which the Shares were
traded is as follows:
2000 2000 1999 1999
Quarter Ended Low High Low High
March 31 7 15/16 8 7/8 - -
June 30 8 1/8 9 11/16 - -
September 30 7 7/8 8 15/16 9 13/16 12 15/16
December 31 7 1/4 8 15/16 8 5/8 11 3/8
The last reported sale price of Shares on the American Stock Exchange on March
9, 2001 was $10.61.
In December 1992, the Company issued 10,000 shares of beneficial interest at $20
per share in exchange for $200,000 cash from the Advisor.
On March 29, 1993, the Company commenced a public offering (the "Offering")
through Related Equities Corporation, an Affiliate of the Advisor, and other
broker-dealers on a "best efforts" basis, for up to 10,000,000 of its shares of
beneficial interest, at an initial offering price of $20 per share. The Offering
terminated November 30, 1994, with a total of 3, 809,601 shares sold to the
public, either through the Offering or the Company's dividend reinvestment plan
(the "Reinvestment Plan"), representing Gross Proceeds ("the "Gross Proceeds")
of $76,192,021 (before volume discounts of $40,575).
The Reinvestment Plan became effective March 29, 1993. During the offering
period, the price per share purchased pursuant to the Reinvestment Plan equaled
$20. From November 30, 1994 (the termination of the offering period) until
November 30, 1997, the price per share under the Reinvestment Plan was lowered
to $19. Effective November 30, 1997, the Board adopted a policy to adjust the
reinvestment price annually to reflect the net asset value of a share of the
Company's shares of beneficial interest. Since November 30, 1994, 355,744 shares
have been sold through the Reinvestment Plan, the proceeds of which (the
"Reinvestment Proceeds") were restricted for use in connection with the
Company's redemption plan and were not included in Gross Proceeds.
The Redemption Plan became effective on November 30, 1994. Under the Redemption
Plan, Eligible Shares could be presented to the Company for redemption. Eligible
Shares were shares acquired directly from the Company or through the
Reinvestment Plan owned by the original holder. The Company was required to
redeem such Eligible Shares presented from redemption for cash to the extent it
had sufficient Reinvestment Proceeds.
Through the quarter ended March 31, 1997, the redemption price pursuant to the
Redemption Plan was $19 per Eligible Share. For the quarter ended June 30, 1997,
the Board of Trustees reduced the $19 redemption price to $17.47 to reflect that
shareholders had received, through that date, $1.53 in return of capital
distributions. The Board subsequently adopted a policy to adjust the redemption
price annually to reflect the then net asset value of a share of the Company's
shares of beneficial interest.
Pursuant to the Redemption Plan, 374,412 shares have been redeemed for an
aggregate price of $6,575,799.
During the Offering, the Advisor received 38,481 restricted shares (including
717 from the Reinvestment Plan) in addition to the 10,000 purchased which the
Advisor (pursuant to the terms of the Offering) valued at $14.75 per share. As a
result of shares being redeemed, the Advisor was required to return 172 shares
as of December 31, 1994; no additional shares were required to be returned since
then.
As a result of the adoption of the Proposals (see "Item 1. Business. -
General"), the Company's Reinvestment Plan and Redemption Plan have been
terminated, effective with the distribution for the quarter ended March 31,
1999. The final reinvestment of shares occurred on May 15, 1999. The final
redemption of shares occurred on May 24, 1999. In addition, in connection with
the listing of the Company's Shares on the American Stock Exchange, fractional
shares totaling approximately 612 were redeemed on July 1, 1999.
Distribution Information
Cash distributions per share for the years ended December 31, 2000 and 1999 are
as set forth in the following table:
Cash Distribution Total Amount
for Quarter Ended Date Paid Per Share Distributed
- ----------------- --------- --------- ----------------
March 31, 2000 5/15/00 $ .3625 $1,391,504
June 30, 2000 8/14/00 .3625 1,391,504
September 30, 2000 11/14/00 .3625 1,391,504
December 31, 2000 2/14/01 .3625 1,391,503
------ ---------
Total for 2000 $1.4500 $5,566,015
====== =========
March 31, 1999 5/15/99 $ .3575 $1,372,661
June 30, 1999 8/14/99 .3615 1,387,912
September 30, 1999 11/14/99 .3625 1,391,504
December 31, 1999 2/14/00 .3625 1,391,503
------- ---------
Total for 1999 $1.4440 $5,543,580
====== =========
There are no material legal restrictions upon the Company's present or future
ability to make distributions in accordance with the provisions of the
Declaration of Trust. Future distributions paid by the Company will be at the
discretion of the Trustees and will depend on the actual cash flow of the
Company, its financial condition, capital requirements and such other factors as
the Trustees deem relevant.
In order to qualify as a REIT under the Internal Revenue Code, as amended, the
Company must, among other things, distribute at least 95% (90% commencing in
2001) of its taxable income. The Company believes that it is in compliance with
the REIT-related provisions of the Code.
Of the total distributions of $5,566,015 and $6,946,745 for the years ended
December 31, 2000 and 1999, respectively, $2,248,259 ($.59 per share or 40%) and
$686,445 ($.18 per share or 10%), respectively, represented a return of capital
determined in accordance with generally accepted accounting principles. As of
December 31, 2000, the aggregate amount of the distributions made since the
commencement of the initial public offering representing a return of capital, in
accordance with generally accepted accounting principles, totaled $14,117,727.
The portion of the distributions which constituted a return of capital was made
in order to maintain level distributions to shareholders.
Item 6. Selected Financial Data.
The information set forth below presents selected financial data of the Company.
Additional financial information is set forth in the audited financial
statements and footnotes thereto contained in Item 8, Financial Statements and
Supplementary Data.
Year ended December 31,
OPERATIONS 2000 1999 1998 1997 1996
- ---------- ------ ------------------------ ------ ----------
Total revenues $8,311,139 $5,507,582 $4,031,515 $4,244,854 $4,424,815
Total expenses 4,765,841 2,301,293 647,047 632,304 721,209
--------- --------- ---------- --------- ----------
Income before other gain (loss) 3,545,298 3,206,289 3,384,468 3,612,550 3,703,606
Total other gain (loss) (227,541) 3,054,011 12,144 (66,735) (415,975)
-------- --------- -------- --------- ----------
Net income $3,317,757 $6,260,300 $3,396,612 $3,545,815 $3,287,631
========= ========= ========= ========= =========
Net income per share (basic and diluted) $ .86 $ 1.63 $ .88 $ .92 $ .83
========= ========= ========= ========= =========
Weighted average shares outstanding (basic
and diluted) 3,838,630 3,841,931 3,845,101 3,851,029 3,972,625
========= ========= ========= ========= =========
Year ended December 31,
FINANCIAL POSITION 2000 1999 1998 1997 1996
- ------------------ - ------ ------------------------ ------ ---------
Total assets $70,438,313 $115,565,441 $59,993,040 $61,645,922 $63,147,215
========== =========== ========== ========== ==========
Repurchase facility payable $12,655,940 $19,127,000 $ 0 $ 0 $ 0
========== ========== ========= =========== ==========
Total liabilities $15,362,440 $ 58,474,076 $ 1,788,466 $ 1,259,997 $ 986,551
========== ========== ========= ========= =========
Total shareholders' equity $55,075,873 $ 57,091,365 $58,204,574 $60,385,925 $62,160,664
========== ========== ========== ========== ==========
DISTRIBUTIONS
Distributions to shareholders $5,566,015 $5,543,580 $5,566,903 $5,574,932 $5,569,283
========== ========= ========= ========= =========
Distribution per share $ 1.4500 $ 1.4440 $ 1.4500 $ 1.4500 $ 1.4500
====== ====== ====== ====== ======
The results for the year ended December 31, 1999 reflect a gain on repayment of
two mortgage loans.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
Effective April 26, 1999, upon authorization by the Board of Trustees, the
Company's name was changed from American Mortgage Investors Trust to American
Mortgage Acceptance Company. The Company's shares of beneficial interest (the
"Shares") commenced trading on the American Stock Exchange on July 1, 1999 under
the symbol "AMC". As of December 31, 2000, there were 3,838,630 Shares
outstanding.
The Company's business plan as a publicly traded REIT focuses on three types of
mortgage products: 1) origination of participating FHA insured multifamily
mortgages, 2) origination of construction and permanent mortgage financing for
affordable multifamily housing pursuant to a new venture with Federal National
Mortgage Association ("Fannie Mae"), and 3) acquisition of direct and indirect
subordinated interests in commercial mortgage-backed securities.
The current composition of the Company's investment portfolio reflects the
Company's business plan and is not comparable to its investment portfolio prior
to April 1999. Furthermore, the Company is still in the process of implementing
its new business plan and, therefore, the current portfolio should not be
considered indicative of the composition of the portfolio that might be expected
in the future.
During the year ended December 31, 2000, cash and cash equivalents decreased
approximately $2,170,000 primarily due to principal repayments of a mortgage
loan and GNMA Certificates ($13,921,000), proceeds from the sale of the CMBS
investment ($36,764,000), refund of the deposit held with broker as collateral
for securities sold short ($37,733,000) and funds from repurchase facilities
($13,698,940) which was less than cash used to acquire the investment in ARCap
preferred equity interest ($20,000,000), distributions paid to shareholders
($5,566,000), repayments of the repurchase facility payable ($20,170,000) and an
increase in investment in mortgage loans ($21,487,000).
Net unrealized losses on GNMA investments included in shareholders' equity
pursuant to Statement of Financial Accounting Standards No. 115 aggregated
$22,173 at December 31, 2000. This represents a decrease of $232,766 in the
unrealized loss for the year ended December 31, 2000, of which a decrease of
$112,370 is attributable to the repayments of GNMA investments (which resulted
in a net realized loss of $119,384 and a decrease of $120,396 is attributable to
a decrease in market prices for GNMA investments held at December 31, 2000 and
December 31, 1999. On January 18, 2000, one of the Company's GNMA certificates
in the original amount of $3,928,615 (including the discount), with an amortized
cost basis of $3,671,107 at December 31, 1999, was repaid in the amount of
$3,551,736 along with a prepayment penalty of $177,587 which was received in
February 2000.
The yield on the GNMA Certificates will depend, in part, upon the rate and
timing of principal prepayments on the underlying mortgages in the asset pool.
Generally, as market interest rates decrease, mortgage prepayment rates increase
and the market value of interest rate sensitive obligations like the GNMA
Certificates increases. As market interest rates increase, mortgage prepayment
rates tend to decrease and the market value of interest rate sensitive
obligations like the GNMA certificates tends to decrease. The effect of
prepayments on yield is greater the earlier a prepayment of principal is
received.
The yield on the mortgage loans will depend, in part, on when, and if, the
Company disposes of the mortgage loans prior to maturity or the obligor fully
repays the outstanding debt. The mortgage loans have fixed interest rates, the
base amount of which is insured by HUD, resulting in a minimal amount of
interest rate risk. The effects of prepayment on yield is greater the earlier a
prepayment of principal is received. Due to the uncertainty of future economic
and other factors that affect interest rates and mortgage prepayments, it is not
possible to predict the effects of future events upon the yield to maturity or
the market value of the mortgage loans upon any sale or other disposition or
whether the Company, if it chose to, would be able to reinvest proceeds from
prepayments at favorable rates relative to the current mortgage loan rates.
Effective February 15, 2000, the Company entered into a $60 million FHA
repurchase facility (the "Nomura Repurchase Facility") with Nomura Asset Capital
Corporation. This agreement enables the Company to borrow up to 90% with a
qualified hedge or 80% without a qualified hedge of the fair market value of FHA
loans owned by the Company. The Nomura Repurchase Facility has a term of 364
days and bears interest at LIBOR plus 1.25%. As of December 31, 2000, the amount
outstanding under this facility was $7,138,940, and the interest rate was 7.87%.
This repurchase facility was renewed for $40 million in February 2001, for a
term of one year.
Effective February 15, 2000, the Company entered into a repurchase facility with
Nomura Securities International, Inc. (the "Nomura Securities Repurchase
Facility"). This agreement enables the Company to borrow up to 95% of the fair
market value of qualified mortgage securities owned by the Company. Borrowings
bear interest at LIBOR plus 0.50%. As of December 31, 2000, the amount
outstanding under this facility was $5,517,000, the interest rate was 7.12%.
In order to qualify as a REIT under the Internal Revenue Code, as amended, the
Company must, among other things, distribute at least 95% (90% commencing in
2001) of its taxable income. The Company believes that it is in compliance with
the REIT-related provisions of the Code.
The Company expects that cash generated from the Company's investments will meet
its needs for short-term liquidity, and will be sufficient to pay all of the
Company's expenses and to make distributions to its shareholders in amounts
sufficient to retain the Company's REIT status in the foreseeable future.
Pursuant to the Redemption Plan which became effective November 30, 1994, the
Company was required to redeem eligible shares presented for redemption for cash
to the extent it had sufficient net proceeds from the sale of shares under the
Reinvestment Plan. As a result of the adoption of the Proposals, the Company's
Reinvestment Plan and Redemption Plan have been terminated, effective with the
distribution for the quarter ended March 31, 1999. The final reinvestment of
shares occurred on May 15, 1999. The final redemption of shares occurred on May
24, 1999.
During the year ended December 31, 2000, the Company acquired the following
mortgage loans:
On April 18, 2000, the Company acquired a 100% participation interest in an
FHA-insured first mortgage loan and an additional loan, secured by Hollows
Apartments, a multifamily market-rate housing apartment complex located in North
Carolina. The interest rates for Hollows Apartments are 9.6083% per annum during
the permanent loan period and 7.875% during the construction period. The Note
rate of 7.875% is fully insured by HUD, and secured by a first mortgage deed of
trust. Payments in excess of the Note rate, up to a rate of 9.6083% are secured
by a second mortgage deed of trust and are guaranteed until August 2004 by an
entity related to the general partner of the partnership which owns Hollows
Apartments. The principal balance of the Additional Loan is secured by a
non-interest bearing third mortgage deed of trust. In addition to the interest
rate during the permanent loan period, the Company is entitled to 50% of cash
flow, if any, remaining after the payment of debt service and 25% of the sale or
refinancing proceeds. The total loan is comprised of the mortgage loan of
$8,946,100 and the additional loan of $1,549,200. As of December 31, 2000,
$3,564,064 of the mortgage loan and the full amount of the additional loan had
been funded. Both loans mature in January, 2042 and have 5-year lockouts against
prepayment, as well as a prepayment penalty structure during the second 5-year
period of the loans.
On June 28, 2000 the Company acquired a 100% participation interest in an
FHA-insured first mortgage loan and an additional loan, secured by Elmhurst
Village Apartments, a multifamily market-rate housing apartment complex located
in Florida. The interest rates for Elmhurst Village are 9.3232% per annum during
the permanent loan period and 8% during the construction period. The Note rate
of 8% is fully insured by HUD, and secured by a first mortgage deed of trust.
Payments in excess of the Note rate, up to a rate of 9.3232% are secured by a
second mortgage deed of trust and are guaranteed until December 2004 by an
entity related to the general partner of the partnership which owns the Elmhurst
Village Apartments. The principal balance of the Additional Loan is secured by a
non-interest bearing third mortgage deed of trust. In addition to the interest
rate during the permanent loan period, the Company is entitled to 50% of cash
flow, if any, remaining after the payment of debt service and 25% of the sale or
refinancing proceeds. The total loan is comprised of the mortgage loan of
$21,748,200 and the additional loan of $2,874,000. As of December 31, 2000,
$7,694,310 of the mortgage loan and the full amount of the additional loan had
been funded. Both loans mature in January, 2042 and have 5-year lockouts against
prepayment, as well as a prepayment penalty structure during the second 5-year
period of the loans.
On August 3, 2000, the Company acquired 100% participation interest in an FHA
insured first mortgage loan and an additional loan, secured by The Reserve at
Autumn Creek, a multifamily market-rate housing apartment complex located in
Texas. The interest rates for the Reserve at Autumn Creek are 9.202% during the
permanent loan period and 8% during the construction period. The Note rate of 8%
is fully insured by HUD and secured by a first mortgage deed of trust. Payments
in excess of the Note rate, up to a rate of 9.202% are secured by a second
mortgage deed of trust and are guaranteed until January 2005 by an entity
related to the general partner of the partnership which owns The Reserve at
Autumn Creek. The principal balance of the Additional Loan is secured by a third
mortgage deed of trust. In addition to the interest rate during the permanent
loan period, the Company is entitled to 50% of cash flow, if any, remaining
after the payment of debt service and 25% of the sale or refinancing proceeds.
The total loan is compromised of the mortgage loan of $16,538,700 and the
additional loan of $1,987,000. As of December 31, 2000, $4,583,939 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in and have 5 year lockouts against prepayment, as well as, a
prepayment penalty structure during the second 5 year period of the loans.
The Company completed a loan venture with Federal National Mortgage Association
("Fannie Mae") which has agreed to fund the origination of $250 million of
Delegated Underwriter and Servicer loans for apartment properties that qualify
for low income housing tax credits under Section 42 of the Internal Revenue
Code. Fannie Mae is the nation's largest source of financing for home mortgages
and the largest investor in multifamily mortgages. Under the loan venture
transaction, the Company will originate and contract for individual loans of up
to $6 million dollars each over a two-year period and will work with American
Property Financing, which will underwrite and service the loans for Fannie Mae.
Each property in the transaction will benefit from 9% low income housing tax
credits for no less than 90% of its units. The Company will guaranty a first
loss position of up to 10% of the pool of $250 million and will receive guaranty
and other fees. As of December 31, 2000, the Company originated 4 loans totaling
$4,937,511 under this loan venture.
Management is not aware of any trends or events, commitments or uncertainties,
which have not otherwise been disclosed that will or are likely to impact
liquidity in a material way.
Results of Operations
Comparison of Years Ended December 31, 2000 and 1999
Interest income from mortgage loans decreased approximately $1,005,000 for the
year ended December 31, 2000 as compared to 1999 primarily due to the repayment
of the Town and Country mortgage loan, contribution of Stonybrook FHA Loan to an
unconsolidated subsidiary and the recognition in 1999 of additional interest
income related to the Columbiana loan, which had been reserved in 1998. This was
partially offset by increases due to the three new loans acquired during 2000.
Interest income from GNMA certificates decreased approximately $313,000 for the
year ended December 31, 2000 as compared to 1999 primarily due to the repayment
of one of the GNMA certificates in January 2000.
Interest income from commercial mortgage-backed security-related investment
increased approximately $2,239,000 for the year ended December 31, 2000 due to a
longer holding period for the investment.
Interest income from note receivable increased approximately $361,000 for the
year ended December 31, 2000 primarily due to a loan made to an unconsolidated
subsidiary in March 2000.
Interest income from temporary investments increased $992,000 for the year ended
December 31, 2000 as compared to 1999 due to an increase in the amounts
invested.
Dividend income in the amount of $401,000 was reported for the year ended
December 31, 2000 due to the investment in ARCap preferred stock.
Other income increased approximately $128,000 for the year ended December 31,
2000 as compared to 1999 due to a loan origination fee and the interest income
of a bridge loan.
Interest expense increased $2,465,000 for the year ended December 31, 2000 as
compared to 1999 due to the repurchase facilities and the US treasury note
transactions.
General and administrative expenses increased approximately $280,000 for the
year ended December 31, 2000 as compared to 1999 due to a usage fee for the
Nomura repurchase facilities, increased asset management fees and increased
advertising. This was partially offset by a decrease in the incentive management
fee.
Amortization costs in the amount of $85,000 were expensed for the year ended
December 31, 2000 relating to Nomura deferred costs of the Nomura repurchase
facilities.
A net loss on the commercial mortgage-backed security-related investment and
government security sold short position in the amount of approximately $300,000
was recorded for the year ended December 31, 2000, as opposed to $218,000 for
1999. This was due to fluctuations in the market values of those positions
during 1999 and 2000, until their sale on October 31, 2000.
Comparison of Years Ended December 31, 1999 and 1998
Interest income from mortgage loans decreased approximately $468,000 for the
year ended December 31, 1999 as compared to 1998 primarily due to the repayment
of the Cove and Oxford mortgage loans on March 1, 1999 which was partially
offset by increases due to the receipt of Additional Interest relating to
Columbiana and the accrual of Additional Interest (received in January 2000)
relating to Town and Country, both of which had been fully reserved and reversed
from interest in 1998.
Interest income from REMIC and GNMA certificates decreased approximately $95,000
for the year ended December 31, 1999 as compared to 1998 primarily due to the
repayment of one of the REMICs in October 1998 and a decrease in the balances of
the GNMA certificates due to principal payments received during 1999 and 1998.
Interest income from commercial mortgage-backed security-related investment in
the amount of approximately $950,000 was recorded for the year ended December
31, 1999; such investment was made on September 30, 1999.
Interest income from note receivable in the amount of approximately $86,000 was
recorded for the year ended December 31, 1999 relating to a loan made in May
1999 which was repaid in September 1999.
Interest income from temporary investments increased approximately $980,000 for
the year ended December 31, 1999 as compared to 1998 primarily due to proceeds
from the repayment of the Cove and Oxford mortgage loans on March 1, 1999 which
were temporarily invested in 1999.
Other income in the amount of approximately $23,000 was recorded for the year
ended December 31, 1999 relating primarily to origination points (fees) relating
to the note receivable.
Interest expense in the amount of approximately $907,000 was recorded for the
year ended December 31, 1999 relating to interest on a repurchase facility
payable entered into on September 30, 1999 and interest on a government security
sold short on September 30, 1999.
General and administrative expenses increased approximately $388,000 for the
year ended December 31, 1999 as compared to 1998 primarily due to an incentive
fee payable to the Advisor, an increase in the reimbursements of certain
administrative and other costs incurred by the Advisor on behalf of the Company
and an increase in public relations expenses due to the restructuring of the
Company.
Organization costs in the amount of approximately $365,000 were expensed for the
year ended December 31, 1999 relating to the restructuring of the Company.
A net loss on the commercial mortgage-backed security-related investment and
government security sold short position in the amount of approximately $218,000
was recorded for the year ended December 31, 1999 due to changes in the fair
values of such positions since they originated on September 30, 1999.
A gain on repayment of mortgage loans in the amount of approximately $3,273,000
was recorded for the year ended December 31, 1999 relating to the repayment of
the Cove and Oxford mortgage loans on March 1, 1999.
Distributions
Of the total distributions of $5,566,015 and $6,946,745 for the years ended
December 31, 2000 and 1999, respectively, $2,248,259 ($.59 per share or 40%) and
$686,445 ($.18 per share or 10%), respectively, represented a return of capital
determined in accordance with generally accepted accounting principles. As of
December 31, 2000, the aggregate amount of the distributions made since the
commencement of the initial public offering representing a return of capital, in
accordance with generally accepted accounting principles, totaled $14,117,727.
The portion of the distributions which constituted a return of capital was made
in order to maintain level distributions to shareholders.
Recently Issued Accounting Standards
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It is effective for the Company beginning with the first
quarter of 2001. Because the Company does not currently utilize derivatives,
implementation of this statement did not have a material effect on the Company's
financial statements.
In September of 2000, the FASB issued SFAS No. 140, "Accounting for Transfers of
Financial Assets and Extinguishment of Liabilities". This statement replaces
SFAS No. 125 which had the same name. It revises the standards for accounting
for securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but it carries over most of SFAS No. 125's
provisions without reconsideration. The Company's management does not believe
that application of this statement will have a material impact on the Company's
financial statements.
Forward-Looking Statements
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include statements regarding the intent, belief or
current expectations of the Company and its management and involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following: general economic and business conditions, which will, among other
things, affect the availability and creditworthiness of prospective tenants,
lease rents and the terms and availability of financing; adverse changes in the
real estate markets including, among other things, competition with other
companies; risks of real estate development and acquisition; governmental
actions and initiatives; and environment/safety requirements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof.
Inflation
Inflation did not have a material effect on the Company's results for the
periods presented.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the exposure to loss resulting from changes in interest rates,
foreign currency exchange rates, commodity prices and equity prices. The primary
market risk to which the investments of the Company is exposed is interest rate
risk, which is highly sensitive to many factors, including governmental monetary
and tax policies, domestic and international economic and political
considerations and other factors beyond the control of the Company.
Cash flows and income from the Company's investments at December 31, 2000,
consisting primarily of mortgage loans, GNMA certificates, a preferred equity
interest, notes receivable and cash and cash equivalents, would not be
significantly affected by changes in interest rates, because these instrument
bear interest at fixed rates. Other than the GNMA investments, all of these
investments are carried at amortized cost, so their carrying values are not
impacted by changes in interest rates. The GNMA investments are adjusted to
market value through comprehensive income in the equity statement, but changes
in their value have not historically been significant to shareholders' equity.
The Company's borrowings under repurchase agreements bear interest at rates that
fluctuate with LIBOR. Based on the $12.7 million of borrowings outstanding under
these facilities at December 31, 2000, a 1% change in LIBOR would impact the
Company's net income by approximately $127,000.
-14-
Item 8. Financial Statements and Supplementary Data.
Page
---------------
(a) 1. Financial Statements
Independent Auditors' Report - Deloitte & Touche LLP 15
Independent Auditors' Report - KPMG LLP 16
Consolidated Balance Sheets as of December 31, 2000 and 1999 17
Consolidated Statements of Income for the years ended December 31,
2000, 1999 and 1998 18
Consolidated Statements of Changes in Shareholders' Equity for
the years ended December 31, 2000, 1999 and 1998 19
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998 21
Notes to Consolidated Financial Statements 23
(a) 2. Financial Statement Schedules
All schedules have been omitted because they are not required or
because the required information is contained in the financial
statements or notes thereto.
To the Board of Trustees
And Shareholders of
American Mortgage Acceptance Company
New York, New York
We have audited the accompanying consolidated balance sheets of American
Mortgage Acceptance Company and subsidiary (the "Company") as of December 31,
2000 and 1999, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of American Mortgage Acceptance
Company and subsidiary as of December 31, 2000 and 1999, and the results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
New York, New York
March 16, 2001
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees
American Mortgage Acceptance Company:
We have audited the accompanying statements of income, changes in shareholders'
equity, and cash flows of American Mortgage Acceptance Company (formerly
American Mortgage Investors Trust) for the year ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of American
Mortgage Acceptance Company for the year ended December 31, 1998, in conformity
with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
New York, New York
January 15, 1999
See accompanying notes to financial statements
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
----------------------
2000 1999
----------- -----------
Investments in mortgage loans $31,828,733 $ 28,893,482
Investments in GNMA certificates-available for sale 5,851,219 9,464,437
Investment in ARCap 20,041,733 0
Investment in unconsolidated subsidiary 1,149,182 0
Commercial mortgage-backed security-related investment 0 34,347,403
Deposit with broker as collateral for security sold short 0 37,733,101
Cash and cash equivalents 1,632,652 3,802,298
Notes receivable 8,677,843 0
Accrued interest receivable 680,728 1,180,115
Other assets 576,223 144,605
------------ ------------
Total assets $70,438,313 $115,565,441
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Repurchase facilities payable $12,655,940 $ 19,127,000
Accrued interest payable 27,850 407,952
Accounts payable and accrued expenses 278,760 122,397
Due to Advisor and affiliates 1,008,387 433,265
Distributions payable 1,391,503 1,391,503
Government security sold short 0 36,991,959
--------- ------------
Total liabilities 15,362,440 58,474,076
---------- ------------
Commitments and contingencies
Shareholders' equity:
Shares of beneficial interest; $.10 par value; 12,500,000
shares authorized; 4,213,826 issued and 3,838,630
outstanding 421,383 421,383
Treasury shares of beneficial interest;
375,916 shares (37,520) (37,520)
Additional paid-in capital 68,840,500 68,840,500
Distributions in excess of net income (14,126,317) (11,878,059)
Accumulated other comprehensive losss (22,173) (254,939)
------------- --------------
Total shareholders' equity 55,075,873 57,091,365
---------- ------------
Total liabilities and shareholders' equity $70,438,313 $115,565,441
========== ===========
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
2000 1999 1998
------------- ---------- --------
Revenues:
Interest income:
Mortgage loans $1,565,219 $2,569,901 $3,037,882
REMIC and GNMA certificates and the
FHA Insured Project Loan 472,693 785,591 880,680
Commercial mortgage-backed
security-related investment 3,189,407 950,456 0
Note receivable 446,625 85,786 0
Temporary investments 2,084,417 1,092,617 112,953
Equity in earnings of ARCap 401,096 0 0
Other income 151,682 23,231 0
---------- ----------- ----------
Total revenues 8,311,139 5,507,582 4,031,515
--------- --------- ---------
Expenses:
Interest 3,371,906 906,581 0
General and administrative 1,309,398 1,029,840 642,047
Amortization 84,537 0 5,000
Organization costs 0 364,872 0
----------- ----------- -----------
Total expenses 4,765,841 2,301,293 647,047
--------- --------- ----------
Other gain (loss):
Net loss on commercial
mortgage-backed security-
related investment and
government security sold short (299,555) (217,699) 0
Gain on repayment of
mortgage loans and GNMA
certificiates 72,014 3,271,710 12,144
----------- --------- -----------
Total other gain (loss) (227,541) 3,054,011 12,144
---------- --------- -----------
Net income $3,317,757 $6,260,300 $3,396,612
========= ========= =========
Net income per share
(basic and diluted) $ .86 $ 1.63 $ .88
========= ========== ==========
Weighted average
shares outstanding
(basic and diluted) 3,838,630 3,841,931 3,845,101
========= ========= =========
(continued)
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
Treasury Shares of Additional Distributions Comprehen-
Shares of Beneficial Beneficial Paid-in in Excess sive
Interest Interest
Shares Amount Shares Amount Capital of Net Income Income
--------- ------ -------- -------- ----- ------------- ------------
Balance at December 31, 1997 4,087,583 $408,759 (248,339) $(24,834) $68,849,725 $(9,021,323)
Comprehensive income:
Net income 3,396,612 $3,396,612
---------
Other comprehensive loss:
Net unrealized holding gain
arising during the period 1,079
Less: reclassification adjustment
for gains included in net income (12,144)
----------
Other comprehensive loss (11,065)
----------
Comprehensive income $3,385,547
=========
Issuance of shares of beneficial 85,207 8,521 0 0 1,328,465 0
interest
Distributions 0 0 0 0 0 (5,566,903)
Purchase of treasury shares 0 0 (85,206) (8,521) (1,328,460) 0
------------ -------- ---------- ------- ----------- ------------
Balance at December 31, 1998 4,172,790 417,280 (333,545) (33,355) 68,849,730 (11,191,614)
Comprehensive income:
Net income 6,260,300 $6,260,300
Other comprehensive loss:
Net unrealized holding loss
arising during the period (418,964)
Add: reclassification adjustment
for losses included in net income 1,492
------------
Other comprehensive loss (417,472)
---------
Comprehensive income $ 5,842,828
==========
Issuance of shares of beneficial 41,036 4,103 0 0 629,834 0
interest
Purchase of treasury shares 0 0 (41,651) (4,165) (639,064) 0
Distributions 0 0 0 0 0 (6,946,745)
--------- ----------- -------- --------- ----------- ----------
Balance at December 31, 1999 4,213,826 421,383 (375,196) (37,520) 68,840,500 (11,878,059)
Comprehensive income:
Net income 3,317,757 $3,317,757
Other comprehensive income:
Net unrealized holding gain
arising during the period 291,175
Less: reclassification adjustment
for gains included in net income (58,409)
-----------
Other comprehensive income 232,766
----------
Comprehensive income $3,550,523
=========
Distributions (5,566,015)
-----------
Balance at December 31, 2000 4,213,826 $ 421,383 $ (375,196) $ (37,520) $68,840,500 $(14,126,317)
========= ========= ======== ======== ========== ===========
Accumulated
Other
Comprehen-
sive
Income Total
------------ -----------
Balance at December 31, 1997 $173,598 $60,385,925
Comprehensive income:
Net income 3,396,612
Other comprehensive loss:
Net unrealized holding gain
arising during the period
Less: reclassification adjustment
for gains included in net income
Other comprehensive loss (11,065) (11,065)
Comprehensive income
Issuance of shares of beneficial 0 1,336,986
interest
Distributions 0 (5,566,903)
Purchase of treasury shares 0 (1,336,981)
-------- -----------
Balance at December 31, 1998 162,533 58,204,574
Comprehensive income:
Net income 6,260,300
Other comprehensive loss:
Net unrealized holding loss
arising during the period
Add: reclassification adjustment
for losses included in net income
Other comprehensive loss (417,472) (417,472)
Comprehensive income
Issuance of shares of beneficial 0 633,937
interest
Purchase of treasury shares 0 (643,229)
Distributions (6,946,745)
--------- -----------
--
Balance at December 31, 1999 (254,939) 57,091,365
Comprehensive income:
Net income 3,317,757
Other comprehensive income:
Net unrealized holding gain
arising during the period
Less: reclassification adjustment
for gains included in net income
Other comprehensive income 232,766 232,766
Comprehensive income
Distributions 0 (5,566,015)
---------- ----------
Balance at December 31, 2000 $ (22,173) $55,075,873
======== ==========
See accompanying notes to financial statements
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
2000 1999 1998
------------- ------------ ----------
Cash flows from operating activities:
Net income $ 3,317,757 $ 6,260,300 $ 3,396,612
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Unrealized (gain) loss on commercial mortgage-
backed security-related investment (1,496,017) 1,419,016 0
Unrealized (gain) loss on government security
sold short 1,795,572 (1,201,317) 0
Gain on repayment of mortgage loans (13,582) (3,273,202) 0
Equity in earnings of ARCap (401,096) 0 0
Equity in income of unconsolidated subsidiary (9,182) 0 0
Amortization expense-organization costs 0 5,000
Amortization - deferred financing costs 92,022 0 0
Amortization expense-loan premium and
origination costs 163,371 337,590 553,608
Accretion of GNMA discount (22,356) (23,145) (26,272)
Accretion of discount on commercial
mortgage-backed security-related investment (652,968) (144,061) 0
(Gain) on repayment of REMIC certificates 0 0 (12,986)
(Gain) loss on repayment of GNMA certificates (58,432) 1,492 842
Government security sold short 33,541,350 38,193,276 0
Purchase of government securities sold short (72,328,881) 0 0
Changes in operating assets and liabilities:
Investment in commercial mortgage-
backed security-related investment 36,764,227 (35,622,358) 0
Deposit with broker as collateral for security
sold short 37,733,101 (37,733,101) 0
Accrued interest receivable 499,388 (413,413) (264,775)
Other assets 18,863 (33,159) 0
Due to Advisor and affiliates 575,122 (1,281,829) 504,220
Accounts payable and
accrued expenses 240,402 49,025 24,249
Accrued interest payable (380,102) 407,952 0
--------- ------------ ------------
Net cash provided by (used in) operating
activities 39,378,559 (33,056,934) 4,180,498
------------ ------------ ------------
Cash flows from investing activities:
Increase in investment in mortgage loans (21,486,788) (829,204) 0
Proceeds from repayments of mortgage loans 9,995,170 20,841,545 273,757
Periodic principal payments of mortgage loans 62,069 0 0
Increase in note receivable (7,413,750) (1,900,000) 0
Repayment of note receivable 6,000,000 1,900,000 0
Investment in ARCap preferred stock (20,000,000) 0 0
(Increase) decrease in other assets (375,178) (111,446) 4,826
Principal repayments of GNMA certificates 3,926,772 442,746 413,254
Principal repayments of REMIC certificates 0 0 1,806,973
Costs relating to repayment of mortgage loan (59,583) 0 0
------------ ------------ ------------
Net cash provided by (used in)
investing activities (29,351,288) 20,343,641 2,498,810
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from repurchase facilities payable 13,698,940 19,568,000 0
Repayments of repurchase facilities payable (20,170,000) (441,000) 0
Increase in deferred loan costs (159,842) 0 0
Distributions paid to shareholders (5,566,015) (5,555,242) (5,566,903)
Proceeds from issuance of shares of
beneficial interest 0 633,937 1,336,986
Purchase of treasury shares 0 (643,229) (1,336,981)
----------------- ----------- ----------
Net cash provided by (used in)
financing activities (12,196,917) 13,562,466 (5,566,898)
----------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents (2,169,646) 849,173 1,112,410
Cash and cash equivalents at the beginning
of the year $ 3,802,298 $ 2,953,125 $1,840,715
=========== =========== =========
Cash and cash equivalents at the end of
the year $ 1,632,652 $ 3,802,298 $2,953,125
=========== =========== =========
Supplemental information:
Interest paid $ 3,752,008 $ 498,629 $ 0
=========== =========== ===========
Adjustments due to contribution of mortgage loan to unconsolidated subsidiary:
Increase in investment in unconsolidated
subsidiary $1,140,000
Increase in note receivable 7,264,092
Decrease in investment in mortgage loans (8,404,092)
----------
$ 0
----------------
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General
American Mortgage Acceptance Company (formerly American Mortgage Investors
Trust) (the "Company") was formed on June 11, 1991 as a Massachusetts business
trust for the primary purpose of investing in government-insured mortgages and
guaranteed mortgage-backed certificates. The Company elected to be treated as a
real estate investment trust ("REIT") under the Internal Revenue Code of 1986,
as amended (the "Code").
On April 6, 1999, the Company received the necessary consent from its
shareholders to approve proposals (the "Proposals") to, among other things,
restructure the Company from a closed-ended, finite-life REIT to a publicly
traded, open-ended, infinite-life operating REIT. In addition to restructuring
the Company, the Proposals, among other matters, permit the Company to modify
its investment objectives, to incur a specified amount of indebtedness and to
list the Company's shares on a national exchange.
As a result of the adoption of the Proposals, the Company was liable for the
transaction expenses. Such expenses amounted to approximately $365,000 and are
classified as organization costs in the accompanying statements of income.
Effective April 26, 1999, upon authorization by the Board of Trustees, the
Company's name was changed from American Mortgage Investors Trust to American
Mortgage Acceptance Company.
The Company's business plan focuses on three types of mortgage products: 1)
origination of participating FHA insured multifamily mortgages, 2) origination
of construction and permanent mortgage financing for affordable multifamily
housing pursuant to a new venture with Federal National Mortgage Association
"Fannie Mae"), and 3) acquisition of direct and indirect subordinated interests
in commercial mortgage-backed securities.
The current composition of the Company's investment portfolio reflects the
recent change in the Company's business plan and is not comparable to its
investment portfolio prior to April 1999. Furthermore, the Company is still in
the process of implementing its new business plan and, therefore, the current
portfolio should not be considered indicative of the composition of the
portfolio that might be expected in the future.
The Company is governed by a board of trustees comprised of two independent
trustees and one trustee who is affiliated with Related Capital Company
("Related"). The Company has engaged Related AMI Associates, Inc. (the
"Advisor"), an affiliate of Related, to manage its day-to-day affairs.
NOTE 2 - Accounting Policies
a) Basis of Presentation
The consolidated financial statements of the Company are prepared on the accrual
basis of accounting in accordance with accounting principles generally accepted
in the United States of America ("GAAP"). The preparation of financial
statements in conformity with GAAP requires the Manager to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of amortized assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
consolidated financial statements include the accounts of the Company and one
wholly owned subsidiary, AMAC Repo/Seller. All intercompany accounts and
transactions have been eliminated in consolidation. Unless otherwise indicated,
the "Company" as herein after used, refers to American Mortgage Acceptance
Company and its subsidiary.
b) Investments in Mortgage Loans
The Company accounts for its investments in mortgage loans under the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 114, "Accounting by
Creditors for Impairment of a Loan" ("SFAS 114"). Under SFAS 114, a loan is
impaired when, based on current information and events, it is probable that a
creditor will be unable to collect all amounts due according to the contractual
terms of the loan agreement. SFAS No. 114 requires lenders to measure impaired
loans based on: (i) the present value of expected future cash flows discounted
at the loans' effective interest rate; (ii) the loan's observable market price;
or (iii) the fair value of the collateral if the loan is collateral-dependent.
An allowance for loan losses is maintained if the measure of an impaired loan is
less than its recorded investment. Adjustments to the allowance are made through
corresponding charges or credits to the provision for loan losses.
Interest on mortgage loans is recognized on the accrual basis. Interest which
was accrued but not received is reversed from income if deemed to be
uncollectible.
c) Investments in Mortgage-Backed Securities
The Company accounts for its
investments in mortgage-backed securities under the provisions of SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities".
At the date of acquisition, the Company elected to designate its GNMA
certificates as available-for-sale securities. Available-for-sale securities are
carried at fair value with net unrealized gain (loss) reported as a separate
component of other comprehensive income until realized. A decline in the market
value of any available-for-sale security below cost that is deemed other than
temporary is charged to earnings resulting in the establishment of a new cost
basis for the security. Premiums and discounts are amortized or accreted over
the life of the related security as an adjustment to interest income using the
effective yield method. Dividend and interest income are recognized when earned.
Realized gains and losses on securities are included in earnings and are derived
using the specific identification method for determining the cost of the
securities sold.
d) Investment in ARCap
The Company's preferred equity investment in ARCap Investors, L.L.C. ("ARCap")
is accounted for using the equity method because the Company has the ability to
exercise significant influence, but not control, over ARCap's operating and
financial policies.
e) Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and temporary investments in
short-term instruments with original maturity dates equal to or less than three
months.
f) Loan Origination Costs
Acquisition fees and other direct expenses incurred for activities performed to
originate or acquire mortgage loans have been capitalized and are included in
Investment in Mortgage Loans in the balance sheets. Loan origination costs are
being amortized to interest income using the effective yield method over the
lives of the respective mortgages.
g) Fair Value of Financial Instruments
As described above, the Company's GNMA certificates are carried at estimated
fair values. The Company has determined that the fair value of its remaining
financial instruments, including its mortgage loans and cash and cash
equivalents, notes receivable, investment in ARCap, and secured borrowings
approximate their carrying values at December 31, 2000 and 1999. The fair value
of investments in mortgage loans and GNMA certificates are based on actual
market price quotes or by determining the present value of the projected future
cash flows using appropriate discount rates, credit losses and prepayment
assumptions. Other financial instruments carry interest rates which are deemed
to approximate market rates.
h) Income Taxes
The Company has qualified as a REIT under the Code. A REIT is generally not
subject to federal income tax on that portion of its REIT taxable income
("Taxable Income") which is distributed to its shareholders provided that at
least 95% of Taxable Income is distributed and provided that such income meets
certain other conditions. Accordingly, no provision for federal income taxes is
required. The Company may be subject to state taxes in certain jurisdictions.
During 2000, the Company declared distributions of $1.45 per share. For federal
income tax purposes, $1.20 and $.25 of the distributions were reported as
ordinary income and return of capital, respectively, to shareholders for 2000.
i) Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income," requires the Company to classify
items of "other comprehensive income", such as unrealized gains and losses on
its investment in GNMA certificates, by their nature in the financial statements
and display the accumulated balance of other comprehensive income (loss)
separately from shareholders' equity in the shareholders' equity section of the
balance sheets. In accordance with SFAS No. 130, cumulative unrealized gains and
losses on securities available-for-sale are classified as accumulated other
comprehensive income in shareholders' equity and current period unrealized gains
and losses are included as a component of comprehensive income.
j) Use of Estimates
The preparation of financial statements in conformity with GAAP requires the
Advisor to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
k) Segment Information
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information", requires enterprises to report certain financial and descriptive
information about their reportable operating segments, and certain
enterprise-wide disclosures regarding products and services, geographic areas
and major customers. The Company is an investor in mortgage products and
operates in only one reportable segment. The Company does not have or rely upon
any major customers. All of the Company's investments are secured by real estate
properties located in the United States; accordingly, all of its revenues were
derived from U.S. operations.
l) New Pronouncements
In December of 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements". This bulletin summarizes certain of the staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. The Company's management believes that the guidance expressed in the
bulletin does not affect the Company's correct revenue recognition policies.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It is effective for the Company beginning with the first
quarter of 2001. Because the Company does not currently utilize derivatives,
implementation of this statement has not had a material effect on the Company's
financial statements.
In September of 2000, the FASB issued SFAS No. 140, "Accounting for Transfers of
Financial Assets and Extinguishment of Liabilities". This statement replaces
SFAS No. 125 which had the same name. It revises the standards for accounting
for securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but it carries over most of SFAS No. 125's
provisions without reconsideration. The Company's management does not believe
that application of this statement will have a material impact on the Company's
financial statements.
l) Reclassifications
Certain amounts in the 1999 and 1998 financial statements have been reclassified
to conform to the 2000 presentation.
AMERICAN MORTGAGE ACCEPTANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - Investments in Mortgage Loans
Information relating to investments in mortgage loans as of December 31, 2000
and 1999 is as follows:
Accum
-ulated
Amor-
Date tization-
of
Invest- Amounts Advanced Additional
------------------------
ment/ Interest
Final Interest Out- Loans Earned Less
Matu Rate Total standinOrigi- and Balance Balance by the 2000 Net
on at at
Descrip -rity Mortga Mortgage Addition Amounts Loan nation Origina Decembe December Company Amor- Interest
Property Loan Advanced Balance Costs tion 31, 31, for tizatio Earned
-tion Date (A) Loans Loans(B) Costs 2000(G) 1999 2000
------------ --- ------ ------ ----- ------- ---- ----
Town & 330 4/94 7.375%$9,348,000 $1,039,000 $10,387,000 $(C) $0 $0 $0 $9,936,476 $168,643 $(14,470) $154,173
Country Apt. 5/29 9.167%
IV
Apts. Units(D) (E)
(F)
Urbana,
IL
Columbiana204 4/94 (E) 9,106,099 563,000 9,669,099 9,524,355 537,558 498,412 9,563,501 9,705,686 533,987 (89,701) 444,286
Lakes Apt. 5/29
Apts.
Columbia, Units(C)
(M)
SC (H)
Stony 125 12/95 7.75%- (I) 763,909 763,909 763,909 413,492 428,736 748,665 9,251,320 278,010 (88,978) 189,032
Brook
Village Apt. 6/37 9.128%
II
Apts. Units(C) (F)
East
Haven,
CT (H)
Hollows 184 4/00 7.875% 3,564,064 1,549,200 5,113,264 5,113,264 (197,829) (12,305) 4,927,740 0 185,087 12,305 197,392
Apts. Apt. 1/42 9.3232%
GreenvilleUnits (J)
SC
Elmhurst 313 6/00 8.00%- 7,694,310 2,874,000 10,568,310 10,568,310 (495,940)(15,439) 10,087,809 0 371,060 15,439 386,499
Village Apt. 1/42 9.3232%
Oveida, Units (K)
FL
Reserve 212 8/00 8.00%- 4,583,939 1,987,000 6,570,939 6,570,939 (71,955) (2,034) 6,501,018 0 191,803 2,034 193,837
at
Autumn Apt. (M) 9.202%
Creek Units (L)
Friends-
wood, TX
-------------------------------------------------------------------------------------
Total $34,296,412$8,776,109$43,072,521$32,540,777$185,326$897,370$31,828,733$28,893,482$1,728,590$(163,371)$1,565,219
=====================================================================================
AMERICAN MORTGAGE ACCEPTANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(A) The minimum interest rate shown represents base interest, which is fully
insured by HUD ("Base Interest"). The additional interest rate represents
interest which is not contingent upon cash flow and is secured by partnership
interests in the partnerships which own the Developments ("Additional
Interest").
(B) Additional loans are non-interest bearing.
(C) The operations of Town and Country had not been able to support the payment
of Additional Interest for the period July 1, 1997 through December 31, 1999
which amounted to $411,911. Accordingly, the accrued interest income that was
doubtful of collection was fully reserved and excluded from interest income from
mortgage loans in previous quarters. On January 21, 2000, the general partner of
the Town and Country obligor, in exchange for the waiving of the prepayment
penalty and future Additional Interest repaid the additional loan and Additional
Interest due through January 21, 2000 in the amounts of $1,039,000 and $421,273,
respectively. As a result, the Additional Interest which had been fully reserved
was deemed to be fully collectible and recorded as interest income in the fourth
quarter of 1999. On March 31, 2000, the Town and Country obligor fully repaid
the FHA insured mortgage and accrued Base Interest in the amounts of $8,934,581
and $53,040, respectively, resulting in a gain on the repayment in the amount of
$28,165 (including a $45,000 loan termination fee due from the Company to the
loan servicing agent and unamortized origination costs).
(D) The Mortgages have terms of 40 years, subject to mandatory prepayment at any
time after 10 years and upon one year's notice.
(E) The interest rates for Columbiana are 7.9%-8.678% during the permanent loan
period and was 7.4% during the construction period. In addition to the interest
rate during the permanent loan period, the Company will be entitled to 25% of
the cash flow remaining after payment of 8.678% interest. The operations of
Columbiana had not been able to support the payment of Additional Interest for
the period October 1, 1997 through June 30, 1998 which amounted to $48,760.
Accordingly, the accrued interest income that was deemed doubtful of collection
was fully reserved and reversed from interest income from mortgage loans in the
fourth quarter of 1998. As a result of the Company's final advance and
conversion of the construction loan to a permanent loan during the second
quarter of 1999, Columbiana was able to repay construction period advances from
the developer as well as Additional Interest due to the Company through the
second quarter. As a result, the Additional Interest which had been fully
reserved was recorded as interest income in the second quarter of 1999.
(F) In addition to the interest rate, the Company is entitled to 40% of the cash
flow remaining after payment of Base and Additional Interest.
(G) Aggregate cost for federal income tax purposes is $29,766,598.
(H) In order for the Company to exercise an acceleration option it must
terminate the mortgage insurance contract with FHA not later than the
accelerated payment date and, in certain circumstances, must terminate the
mortgage insurance contract upon the exercise of the acceleration option. Since
the exercise of such option would be at the Company's discretion, it is intended
to be exercised only where the value of the underlying property has increased by
an amount which would justify accelerating payment in full and assuming the
risks of foreclosure if the mortgagor failed to make the accelerated payment.
(I) The Company contributed the FHA portion of this loan to capitalize AMAC/FM,
an unconsolidated subsidiary. The principal amount contributed was $8,404,092
(See Note 12). The Company retained the additional loan.
(J) The interest rates for Hollows Apartments are 9.6083% per annum during the
permanent loan period and 7.875% during the construction period. The Note rate
of 7.875% is fully insured by HUD, and is secured by a first mortgage deed of
trust. Payments in excess of the Note rate, up to a rate of 9.6083%, are secured
by a second mortgage deed of trust and are guaranteed until August 2004 by an
entity related to the general partner of the partnership which owns Hollows
Apartments. The principal balance of the Additional Loan is secured by a third
mortgage deed of trust. In addition to the interest rate during the permanent
loan period, the Company is entitled to 50% of cash flow, if any, remaining
after the payment of debt service and 25% of the sale or refinancing proceeds.
The total loan is comprised of the mortgage loan of $8,946,100 and the
additional loan of $1,549,200. As of December 31, 2000, $3,564,064 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in January, 2042, have 5-year lockouts against prepayment, and have
a prepayment penalty structure during the second 5-year period of the loans.
(K) The interest rates for Elmhurst Village are 9.3232% per annum during the
permanent loan period and 8% during the construction period. The Note rate of 8%
is fully insured by HUD, and is secured by a first mortgage deed of trust.
Payments in excess of the Note rate, up to a rate of 9.3232%, are secured by a
second mortgage deed of trust and are guaranteed until December 2004 by an
entity related to the general partner of the partnership which owns the Elmhurst
Village Apartments. The principal balance of the Additional Loan is secured by a
third mortgage deed of trust. In addition to the interest rate during the
permanent loan period, the Company is entitled to 50% of cash flow, if any,
remaining after the payment of debt service and 25% of the sale or refinancing
proceeds. The total loan is comprised of the mortgage loan of $21,748,200 and
the additional loan of $2,874,000. As of December 31, 2000, $7,694,310 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in January, 2042 and have 5-year lockouts against prepayment, as
well as a prepayment penalty structure during the second 5-year period of the
loans.
(L) The interest rates for the Reserve at Autumn Creek are 9.202% during the
permanent loan period and 8% during the construction period. The Note rate of 8%
is fully insured by HUD and is secured by a first mortgage deed of trust.
Payments in excess of the Note rate, up to a rate of 9.202%, are secured by a
second mortgage deed of trust and are guaranteed until January 2005 by an entity
related to the general partner of the partnership which owns The Reserve at
Autumn Creek. The principal balance of the Additional Loan is secured by a third
mortgage deed of trust. In addition to the interest rate during the permanent
loan period, the Company is entitled to 50% of cash flow, if any, remaining
after the payment of debt service and 25% of the sale or refinancing proceeds.
The total loan is compromised of the mortgage loan of $16,538,700 and the
additional loan of $1,987,000. As of December 31, 2000, $4,583,939 of the
mortgage loan and the full amount of the additional loan had been funded. Both
loans mature in December 2041 and have 5 year lockouts against prepayment, as
well as a prepayment penalty structure during the second 5 year period of the
loans.
(M) Pledged as collateral in connection with a secured credit repurchase
facility with Nomura Asset Capital Corporation (See Note 6).
Further information relating to investments in mortgage loans for the years
ended December 31, 2000, 1999 and 1998 is as follows:
2000 1999 1998
--------------- -------- ------------
Reconciliation of mortgage loans:
Balance at beginning of period $28,893,482 $45,965,488 $46,792,853
Advances made during the period 22,252,512 829,204 0
Loan origination fees (net of acquisition
expenses) (765,724) 4,723 0
Proceeds from repayment of mortgage loans (9,995,170) (20,841,545) (273,757)
Periodic principal payments of mortgage loans (62,069) 0 0
Loan contributed to unconsolidated subsidiary (8,404,092) 0 0
Excess of proceeds over carrying value of
mortgage loans 13,582 3,273,202 0
Costs relating to repayment of mortgage loan 59,583 0 0
Amortization of acquisition expenses (38,680) (103,318) (180,692)
Amortization of additional loans (124,691) (234,272) (372,916)
------------ ------------ ------------
Investments in mortgage loans - December 31, $31,828,733 $28,893,482 $45,965,488
========== ========== ==========
AMERICAN MORTGAGE ACCEPTANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - Investments in GNMA Certificates-Available for Sale
Information relating to investments in GNMA Certificates as of December 31, 2000
and 1999 is as follows:
Accumulated
Date Original Amorti- Unrealized Interest
Purchased Purchase azation at Loan Gain Earned
/Final Stated Price Principal Discount December Origination Loss Balance Balance by the
CertificatePayment Including at at Costs at at at at Company
Interest December December December December December December
Seller Number Date Rate Discount 31,2000 31,2000 31,2000 31,2000 31,2000 31,2000 31,1999 for 2000
- ------ --------- -------------- ------- ----- ------ ------ -------- ------- ------------- -----
GNMA Certificates
Bear Stearns 0355540 7/27/94 7.125% $2,407,102 $2,516,855 $(232,809 $126,289 $77,865 $9,975 $2,498,17 $2,431,778 $180,128
3/15/29
Malone Mortgage 0382486 7/28/94 8.500% 2,197,130 2,124,715 (7,967) 4,511 72,162 (33,516) 2,159,906 2,168,686 181,179
8/15/29
Goldman Sachs 0328502 7/29/94 8.250% 3,928,615 0 0 0 0 0 0 3,565,054 0
7/15/29
SunCoast Capital G22412 6/23/97 7.000% 1,981,566 1,193,511 (7,832) 6,092 0 1,368 1,193,138 1,298,919 89,030
Group, Ltd.
4/20/27
-------- --------- -------- ------- --------- -------- -------- -------- -------
Total $10,514,413 $5,835,081 $(248,608) $136,892 $150,027$(22,173) $5,851,219 $9,464,437 $450,337
======== ========= ======== ======= ========= ======== ======== ======== =======
Net
2000 Interest
Accretion Earned
--------- ---
Bear Stearns $ 19,775 $199,903
Malone Mortgage 706 181,885
Goldman Sachs 13 13
SunCoast Capital 1,862 90,892
Group, Ltd.
-------- ------
Total $22,356 $472,693
======== ======
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amortized cost, unrealized gain and fair value for the investment in GNMA
Certificates at December 31, 2000 and 1999 were as follows:
December 31,
------------------------------
2000 1999
------------- --------------
Amortized cost $5,873,392 $9,719,376
Gross unrealized gain (loss) (22,173) (254,939)
---------- ----------
Fair Value $5,851,219 $9,464,437
========= =========
For the year ended December 31, 2000, there were gains and losses of $741 and
$119,895, respectively, (including acquisition fees and expenses) on principal
repayments of GNMA certificates. For the year ended December 31, 1999, there
were gains and losses of $1,790 and $3,282, respectively, (including acquisition
fees and expenses) on principal repayments of REMIC and GNMA certificates.
Due to the complexity of the GNMA structure and the uncertainty of future
economic and other factors that affect interest rates and mortgage prepayments,
it is not possible to predict the effect of future events upon the yield to
maturity or the market value of the GNMA Certificates upon any sale or other
disposition or whether the Company, if it chose to, would be able to reinvest
proceeds from prepayments at favorable rates relative to the coupon rate.
NOTE 5 - Commercial Mortgage-Backed Security-Related Investment and Short Sale;
Investment in ARCap
On September 30, 1999, the Company acquired from ARCap a "BB+" rated
subordinated commercial mortgage-backed security ("CMBS") from a Chase Manhattan
Bank-First Union Nation Bank Commercial Mortgage Trust. The CMBS investment,
which was purchased for $35,622,358, has a face amount of $50,399,711 and an
annual coupon rate of 6.4%. This investment was accounted for as a trading asset
and carried at estimated fair value, with changes in fair value included in
earnings. The Company purchased the CMBS investment using cash and debt provided
through the Bear Stearns Repurchase Facility (see Note 6). In connection with
this acquisition, the Company entered into an agreement (the "Agreement") with
ARCap. Under the Agreement, the Company had the right to sell the CMBS
investment to ARCap and purchase a preferred equity position in ARCap, all based
on the then fair value of the CMBS investment.
This investment was accounted for as a trading asset and carried at estimated
fair value, with changes in fair value included in earnings. Interest income was
accrued as it became receivable, and included accretion of discounts, computed
using the effective yield method, after considering estimated prepayments and
credit losses. The Company recognized gains on this investment totaling
$1,496,017 in 2000 and losses of $1,419,016 in 1999, due to mark-to-market
adjustments.
On September 30, 1999, in order to mitigate the potential income statement
effect of changes in the fair value of its CMBS investment caused by changes in
interest rates, the Company entered into a short sale involving the sale of a
U.S. Treasury Note with a face amount of $39,327,000 and an annual coupon rate
of 5.625% borrowed from Bear Stearns & Co., Inc. ("Bear Stearns"). On March 16,
2000, the Company replaced the borrowed security by purchasing such security
through Bear Stearns, and entered into an additional short sale contract
involving the sale of a U.S. Treasury Note with a face amount of $34,512,000 and
an annual coupon rate of 6.0% borrowed from Bear Stearns. On November 1, 2000,
the Company terminated the short sale in connection with its sale of the
associated CMBS investment. The Company earned $1,498,627 and $471,262 on short
sale proceeds held by Bear Stearns during 2000 and 1999, respectively (included
in interest income from temporary investments) and incurred interest of
$1,757,648 and 547,025 on its short sale contracts during 2000 and 1999,
respectively (included in interest expense. Short sale positions were carried at
estimated fair value, with changes in fair value included in earnings. The
Company recognized losses on these positions totaling $1,795,572 in 2000 and
gains of $1,201,317 in 1999 due to mark-to-market adjustments.
On November 1, 2000, the Company, in accordance with the Agreement, sold the
CMBS investment to ARCap and repaid its borrowing under the repurchase facility
(see Note 6), closed out its short sales position and purchased a preferred
equity interest in ARCap in the face amount of $20,000,000, with a preferred
dividend rate of 12%. This preferred equity interest was recorded at
$19,640,637, representing the fair value of the CMBS investment at the date of
the transaction, less the Bear Stearns Repurchase Facility repayment plus
approximately $3.5 million in cash paid to ARCap.
Summarized information for ARCap as of December 31, 2000 and the year then ended
is as follows:
Investment securities - trading $214,000,516
Investment securities - available for sale 76,092,175
Other assets 20,249,212
------------
Total assets $310,341,903
===========
Repurchase agreements and other liabilities$133,314,684
Members' equity 177,027,219
-----------
Total liabilities and equity $310,341,903
===========
Total revenues $ 19,931,055
Total expenses 8,105,265
-------------
Net income $ 11,825,790
============
NOTE 6 - Repurchase Facilities
On September 30, 1999, the Company entered into a repurchase facility with Bear
Stearns (the "Bear Stearns Repurchase Facility"), whereby Bear Stearns advanced
$19,568,000 in cash towards the purchase of the CMBS-related investment (see
Note 5). The Bear Stearns Repurchase Facility had a variable interest rate based
on the one-month LIBOR rate plus 1.5%, which is adjusted on the first day of
each month. The Bear Stearns Repurchase Facility was repaid November 1, 2000 in
connection with the CMBS sale discussed above.
Effective February 15, 2000, the Company entered into a $60 million FHA
repurchase facility (the "Nomura Repurchase Facility") with Nomura Asset Capital
Corporation. This agreement enables the Company to borrow up to 90% with a
qualified hedge or 80% without a qualified hedge of the fair market value of FHA
loans owned by the Company. The Nomura Repurchase Facility has a term of 364
days and bears interest at LIBOR plus 1.25%. As of December 31, 2000, the amount
outstanding under this facility was $7,138,940, and the interest rate was 7.87%.
Deferred costs of $79,815 relating to the Nomura Repurchase Facility are being
amortized using the straight-line method over 364 days, which is the term of the
facility.
Effective February 15, 2000, the Company entered into a repurchase facility with
Nomura Securities International, Inc. (the "Nomura Securities Repurchase
Facility"). This agreement enables the Company to borrow up to 95% of the fair
market value of qualified mortgage securities owned by the Company. Borrowings
bear interest at LIBOR plus 0.50%. As of December 31, 2000, the amount
outstanding under this facility was $5,517,000, and the interest rate was 7.12%.
Deferred costs of $79,815 relating to the Nomura Securities Repurchase Facility
are being amortized using the straight-line method over five years.
NOTE 7 - Related Party Transactions
Prior to the adoption of the Proposals on April 6, 1999, the Company had an
agreement with the Advisor pursuant to which the Advisor received compensation
consisting primarily of (i) asset management fees calculated as .625% of total
assets invested by the Company; (ii) a subordinated incentive fee based on the
economic gain on the sale of Mortgage Investments; (iii) reimbursement of
certain administrative and other costs incurred by the Advisor on behalf of the
Company; and (iv) certain other fees. In addition, with respect to Mortgage
Loans acquired by the Company, the Advisor was entitled to receive loan
placement fees paid by borrowers equal to up to 1.5% of the principal amount of
each mortgage loan.
As a result of the adoption of the Proposals (see Note 1), the Board of Trustees
amended the Advisory Agreement between the Company and the Advisor to, among
other matters, reflect the Proposals and change the Advisory Agreement's fee
structure to (a) eliminate the acquisition and disposition fees payable to the
Advisor; (b) modify the annual asset management fee payable to the Advisor as
set forth below; and (c) include an annual incentive fee payable to the Advisor
as also set forth below. The modified annual asset management fee is calculated
as follows: (i) .355% for investments in Mortgage Loans; (ii) .355% for certain
investment grade investments; (iii) .750% for certain non-investment grade
investments; (iv) 1.000% for unrated investments; and (v) .625% for investments
held prior to the adoption of the Proposals. The annual incentive fee is
calculated as follows: subject to a minimum annual distribution being made to
shareholders from cash available for distribution of approximately $1.45 per
Share, the Advisor will be entitled to receive incentive compensation for each
fiscal year in an amount equal to the product of (A) 25% of the dollar amount by
which (1)(a) Funds From Operations of the Company (before the incentive fee) per
Share (based on the weighted average number of Shares outstanding) plus (b)
gains (or minus losses) from debt restructuring and sales of property per Share
(based on the weighted average number of Shares outstanding), exceed (2) an
amount equal to (a) the weighted average of the price per Share of the initial
offering (i.e. $20 per Share) and the prices per Share of any secondary
offerings by the Company multiplied by (b) the ten-year U.S. Treasury rate plus
two percent per annum multiplied by (B) the weighted average number of Shares
outstanding during such fiscal year. For any period less than a fiscal year
during which the amended Advisory Agreement is in effect, the incentive fee will
be prorated according to the proportion which such period bears to a full fiscal
year, taking into account, however, the Company's cash available for
distribution for the entire fiscal year.
In addition, the Advisory Agreement's fee structure was also changed so that
with respect to the first $100 million of new Mortgage Loans acquired by the
Company, the Advisor will receive origination points paid by borrowers equal to
up to 1% of the principal amount of each Mortgage Loan and the Company will
receive origination points paid by borrowers in excess of 1%. After the first
$100 million of additional Mortgage Loans is acquired, the Company will retain
100% of the origination points paid by borrowers.
The costs incurred to related parties for the years ended December 31, 2000,
1999 and 1998 were as follows:
Years Ended December 31,
2000 1999 1998
----------- ----------- -----------
Expense reimbursement $374,751 $255,616 $120,029
Asset management fees 386,112 335,682 362,280
Incentive fee 0 122,270 0
------------ ------- ------------
$760,863 $713,568 $482,309
======= ======= =======
Asset management fees, the incentive management fee and expense reimbursements
owed to the Advisor and its affiliates amounting to approximately $243,000 and
$431,000 were accrued and unpaid at December 31, 2000 and 1999, respectively.
On May 19, 1999, the Company made a loan in the amount of $1,900,000 to
Patterson Hope '98 Urban Renewal L.L.C. (the "Borrower"), an entity in which an
affiliate of the Advisor is a member. The note bore interest at 12% which was
payable, along with the principal, at maturity on September 15, 1999. The note
was secured by all of the membership interest in the Borrower, was guaranteed by
Related Capital Company and could be prepaid in whole or in part at any time. In
September 1999, the loan was repaid and the Advisor and the Company each
received origination points in the amount of $19,000. The Company earned
interest income of approximately $86,000 from this loan.
NOTE 8 - Earnings Per Share
Basic net income per share in the amount of $.86, $1.63 and $.88 for the years
ended December 31, 2000, 1999 and 1998, respectively, equals net income for the
periods ($3,317,757, $6,260,300 and $3,396,612, respectively), divided by the
weighted average number of shares outstanding for the periods (3,838,630,
3,841,931 and 3,845,101, respectively).
Because the Company has no dilutive securities outstanding at December 31, 2000,
diluted net income per share is the same as basic net income per share.
NOTE 9 - Capital Shares
In December 1992, the Company issued 10,000 shares of beneficial interest at $20
per share in exchange for $200,000 cash from the Advisor.
On March 29, 1993, the Company commenced a public offering (the "Offering")
through Related Equities Corporation, an Affiliate of the Advisor, and other
broker-dealers on a "best efforts" basis, for up to 10,000,000 of its shares of
beneficial interest, at an initial offering price of $20 per share. The Offering
terminated November 30, 1994, with a total of 3,809,601 shares sold to the
public, either through the Offering or the Company's dividend reinvestment plan
(the "Reinvestment Plan"), representing Gross Proceeds ("the "Gross Proceeds")
of $76,192,021 (before volume discounts of $40,575).
The Reinvestment Plan became effective March 29, 1993. During the offering
period, the price per share purchased pursuant to the Reinvestment Plan equaled
$20. From November 30, 1994 (the termination of the offering period) until
November 30, 1997, the price per share under the Reinvestment Plan was lowered
to $19. Effective November 30, 1997, the Board adopted a policy to adjust the
reinvestment price annually to reflect the net asset value of a share of the
Company's shares of beneficial interest. Since November 30, 1994, 355,744 shares
have been sold through the Reinvestment Plan, the proceeds of which (the
"Reinvestment Proceeds") were restricted for use in connection with the
Company's redemption plan and were not included in Gross Proceeds.
The Redemption Plan became effective on November 30, 1994. Under the Redemption
Plan, Eligible Shares could not be presented to the Company for redemption.
Eligible Shares were shares acquired directly from the Company or through the
Reinvestment Plan owned by the original holder. The Company was required to
redeem such Eligible Shares presented from redemption for cash to the extent it
had sufficient Reinvestment Proceeds.
Through the quarter ended March 31, 1997, the redemption price pursuant to the
Redemption Plan was $19 per Eligible Share. For the quarter ended June 30, 1997,
the Board of Trustees reduced the $19 redemption price to $17.47 to reflect that
shareholders had received, through that date, $1.53 in return of capital
distributions. The Board subsequently adopted a policy to adjust the redemption
price annually to reflect the then net asset value of a share of the Company's
shares of beneficial interest.
Pursuant to the Redemption Plan, 375,916 shares have been redeemed for an
aggregate price of $6,575,799.
During the Offering, the Advisor received 38,481 restricted shares (including
717 from the Reinvestment Plan) in addition to the 10,000 purchased which the
Advisor (pursuant to the terms of the Offering) valued at $14.75 per share. As a
result of shares being redeemed, the Advisor was required to return 172 shares
as of December 31, 1994; no additional shares were required to be returned since
then.
As a result of the adoption of the Proposals (see Note 1), the Company's
Reinvestment Plan and Redemption Plan have been terminated, effective with the
distribution for the quarter ended March 31, 1999. The final reinvestment of
shares occurred on May 15, 1999. The final redemption of shares occurred on May
24, 1999. In addition, in connection with the listing of the Company's Shares on
the American Stock Exchange, fractional shares totaling approximately 612 were
redeemed on July 1, 1999.
NOTE 10 - Selected Quarterly Financial Data (unaudited)
2000 Quarter Ended
-----------------------------------------------------------------------
March 31 June 30 September 30 December 31
-------------- ----------------- ------------ -----------
Revenues:
Interest income:
Mortgage loans $ 491,400 $ 196,326 $ 500,295 $ 377,315
GNMA certificates 119,631 118,630 117,701 116,731
Commercial mortgage-backed
security-related investment 950,662 956,530 960,467 321,748
Note receivable 0 146,168 131,381 169,076
Temporary investments 547,104 674,520 624,146 238,647
Dividend income 0 0 0 401,096
Other income 0 0 167,279 (15,597)
--------------- --------------- ---------- -----------
Total revenues 2,108,797 2,092,174 2,501,269 1,609,016
--------- --------- --------- ---------
Expenses:
Interest 909,107 903,614 1,044,215 514,970
General and administrative 332,220 257,970 425,520 293,688
Amortization 13,651 20,350 26,227 24,309
----------- ----------- ----------- -----------
Total expenses 1,254,978 1,181,934 1,495,962 832,967
--------- --------- --------- ----------
Other gain (loss):
Net gain (loss) on commercial
mortgage-backed security-related
investment and government
security sold short (457,042) (253,735) 246,341 164,881
Gain (loss) on repayment of mortgage loans
and GNMA certificates 86,439 (6,077) (8,371) 23
----------- ------------- ------------ ---------------
Total other gain (loss) (370,603) (259,812) 237,970 164,904
---------- ----------- ---------- ----------
Net income $ 483,216 $ 650,428 $1,243,277 $ 940,953
========== ========== ========= =========
Net income per share
(basic and diluted) $ .13 $ .17$ .32 $ .25
============== ============== =============== ==============
1999 Quarter Ended
-----------------------------------------------------------------------
March 31 June 30 September 30 December 31
-------------- ----------------- ------------ -----------
Revenues:
Interest income:
Mortgage loans $ 548,365 $ 666,585 $465,994 $ 888,957
GNMA certificates 199,646 196,898 195,315 193,732
Commercial mortgage-backed
security-related investment 0 0 10,187 940,269
Note receivable 0 26,860 58,926 0
Temporary investments 96,528 262,386 221,459 512,244
Other income 0 4,231 19,000 0
--------------- ------------ -------- ---------------
Total revenues 844,539 1,156,960 970,881 2,535,202
---------- --------- ------- ---------
Expenses:
Interest 0 0 6,061 900,520
General and administrative 137,534 298,729 250,841 342,736
Organization costs 0 348,413 16,405 54
-------------- ---------- -------- --------------
Total expenses 137,534 647,142 273,307 1,243,310
---------- ---------- ------- ---------
Other gain (loss):
Net unrealized loss on commercial
mortgage-backed security-related
investment and government
security sold short 0 0 0 (217,699)
Gain (loss) on repayment of mortgage loans
and GNMA certificates 3,273,116 (331) (485) (590)
--------- ------------ --------- -------------
Total other gain (loss) 3,273,116 (331) (485) (218,289)
--------- ------------ --------- ----------
Net income $3,980,121 $ 509,487 $697,089 $1,073,603
========= ---======= ======= =========
Net income per share
(basic and diluted) $ 1.03$ .13 $ .18 $ .28
============= ============== =========== ==============
NOTE 11 - Commitments and Contingencies
The Company completed a loan venture with Federal National Mortgage Association
("Fannie Mae") which has agreed to fund the origination of $250 million of
Delegated Underwriter and Servicer loans for apartment properties that qualify
for low income housing tax credits under Section 42 of the Internal Revenue
Code. Under the loan venture, the Company will originate and contract for
individual loans of up to $6 million dollars each over a two-year period and
will work with American Property Financing, which will underwrite and service
the loans for Fannie Mae. Each property in the transaction will benefit from 9%
low income housing tax credits for no less than 90% of its units. The Company
will guaranty a first loss position of up to 10% of the pool of $250 million and
will receive guaranty and other fees. As of December 31, 2000, the Company
originated four loans totaling $4,937,511 under this loan venture.
NOTE 12 - Investment in Unconsolidated Subsidiary and Note Receivable
The Company has entered into an agreement with the Federal National Mortgage
Association ("Fannie Mae") whereby the company will provide first loss
protection ("First Loss Obligation") on certain loans originated by Fannie Mae
pursuant to a Master Financing and Loss Sharing Agreement (See Note 11). Through
an unconsolidated subsidiary, AMAC/FM Corporation ("AMAC/FM"), and pursuant to a
Guaranty and Security Agreement with Fannie Mae, the payment of the First Loss
Obligation is guaranteed and secured by AMAC/FM's pledge and grant to Fannie Mae
of a security interest on certain assets of AMAC/FM.
AMAC/FM was capitalized by a contribution by the Company to AMAC/FM of the
mortgage loan secured by Stony Brook Village II Apartments with a principal
amount of $8,404,092. This contribution was recorded by AMAC/FM as a $7,264,093
loan from the Company via a subordinated promissory note, with a stated interest
rate of 7.75% and a $1,140,000 capital contribution through the issuance of
AMAC/FM non-voting common stock. The Company accounts for its $1,140,000
investment in AMAC/FM under the equity method of accounting, because all of
AMAC/FM's voting common shares are held by the Advisor and, therefore, the
Company does not control AMAC/FM.
During January, 2001, all of the voting common stock of AMAC/FM, previously
owned by the Advisor, was purchased by the Company, the effect of which is to
make AMAC/FM a wholly owned subsidiary of the Company. This change was possible
due to a change in federal REIT legislation passed in December 1999, allowing
REITS to directly own taxable subsidiaries, beginning after the year 2000.
NOTE 13 - Subsequent Event
On February 15, 2001, the Company renewed the Nomura Repurchase Facility with
Nomura Asset Capital Corporation. Under the new terms, the Company may borrow up
to $40 million, with a one time option to increase total borrowings to $60
million. The renewed facility bears interest at LIBOR plus $1.25% and matures
February 15, 2002.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Company.
Incorporated by reference to the Company's definitive proxy statement to be
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
Item 11. Executive Compensation.
Incorporated by reference to the Company's definitive proxy statement to be
filed pursuant to Regulation 14A under the Exchange Act.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Incorporated by reference to the Company's definitive proxy statement to be
filed pursuant to Regulation 14A under the Exchange Act.
Item 13. Certain Relationships and Related Transactions.
Incorporated by reference to the Company's definitive proxy statement to be
filed pursuant to Regulation 14A under the Exchange Act.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Sequential
Page
---------------
(a) 1. Financial Statements
American Mortgage Acceptance Company
Independent Auditors' Report - Deloitte & Touche LLP 15
Independent Auditors' Report - KPMG LLP 16
Balance Sheets as of December 31, 1999 and 1998 17
Statements of Income for the years ended December 31,
1999, 1998 and 1997 18
Statements of Changes in Shareholders' Equity for the years
ended December 31, 1999, 1998 and 1997 19
Statements of Cash Flows for the years ended December
31, 1999, 1998 and 1997 21
Notes to Financial Statements 23
ARCap Investors, L.L.C. 99(a)
Consolidated financial statements for ARCap Investors, L.L.C.
(see Exhibit 99)
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(continued)
Sequential
Page
---------------
(a) 2. Financial Statement Schedules
All schedules have been omitted because they are not required or
because the required information is contained in the financial
statements or notes thereto.
(a) 3. Exhibits
1(a) Dealer Manager Agreement, dated March 29, 1993 as previously filed as an
Exhibit to Amendment No. 3 dated March 23, 1993 to Registrant's Registration
Statement No. 33-42481.
1(b) Form of Soliciting Dealer Agreement as previously filed as an Exhibit to
Amendment No. 3 dated March 23, 1993 to Registrant's Registration Statement No.
33-42481.
3.4 Amended and Restated Declaration of Trust, dated as of March 29, 1993, as
amended as of July 1, 1993 as previously filed as an Exhibit to Post-Effective
Amendment No. 1 dated November 9, 1993.
Amendment No. 2 to Amended and Restated Declaration of Trust, dated as of April
5, 1994 as previously filed as an Exhibit to Annual Report on Form 10-K for the
year ended December 31, 1993.
3.4(c) Second Amended and Restated Declaration of Trust, dated as of April 6,
1999 (incorporated by reference to Exhibit 3.4(c) in the Company's March 31,
1999 Quarterly Report on Form 10-Q).
10(a) Escrow Agreement, dated as of April 16, 1993 and amended as of August 25,
1993 as previously filed as an Exhibit to Post-Effective Amendment No. 1 dated
November 9, 1993.
10(b) Advisory Services Agreement, dated as of March 29, 1993, as amended as of
October 26, 1993 as previously filed as an Exhibit to Post-Effective Amendment
No. 1 dated November 9, 1993.
Amendment to Advisory Services Agreement, dated as of December 31, 1993 as
previously filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1993.
Third Amendment to Advisory Services Agreement, dated as of March 29, 1994 as
previously filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1993.
10(c) TRI Capital Corporation Mortgage Note in the principal amount of
$9,350,000 dated December 16, 1993 as previously filed as an Exhibit to Current
Report on Form 8-K dated December 16, 1993.
10(d) Equity Loan Note in the principal amount of $1,156,000 dated December 16,
1993 as previously filed as an Exhibit to Current Report on Form 8-K dated
December 16, 1993.
10(e) Bridge Loan Note in the principal amount of $115,790, dated December 16,
1993 as previously filed as an Exhibit to Current Report on Form 8-K dated
December 16, 1993.
10(f) Subordinated Promissory Note by Oxford Apartments, L.C., dated December
16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated
December 16, 1993.
10(g) Limited Operating Guaranty between Al L. Bradley, Jr., Tim L. Myers,
Allied Realty Services, Ltd. and American Mortgage Investors Trust, dated
December 16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(h) TRI Capital Corporation Mortgage Note in the principal amount of
$6,800,000, dated December 16, 1993 as previously filed as an Exhibit to Current
Report on Form 8-K dated December 16, 1993.
10(i) Equity Loan Note in the principal amount of $840,500, dated December 16,
1993 as previously filed as an Exhibit to Current Report on Form 8-K dated
December 16, 1993.
10(j) Bridge Loan Note in the principal amount of $84,210, dated December 16,
1993 as previously filed as an Exhibit to Current Report on Form 8-K dated
December 16, 1993.
10(k) Subordinated Promissory Note by Cove Apartments, L.C., dated December 16,
1993 as previously filed as an Exhibit to Current Report on Form 8-K dated
December 16, 1993.
10(l) Limited Operating Guaranty between Al L. Bradley, Jr., Tim L. Myers,
Allied Realty Services, Ltd. and American Mortgage Investors Trust, dated
December 16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(m) Cambridge Realty Capital LTD Mortgage Note in the principal amount of
$9,348,000, dated April 5, 1994 as previously filed as an Exhibit to Current
Report on Form 8-K dated April 21, 1994.
10(n) Equity Loan Note in the principal amount of $1,039,000, dated April 5,
1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April
21, 1994.
10(o) Subordinated Promissory Note by Town and Country IV Apartments, L.C.,
dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form
8-K dated April 21, 1994.
10(p) Limited Operating Guaranty between Leonard E. Wineburgh, Arnold H. Dwinn
and the Company, dated April 5, 1994 as previously filed as an Exhibit to
Current Report on Form 8-K dated April 21, 1994.
10(q) American Capital Resource, Inc. Mortgage Note in the principal amount
of $8,683,000 dated April 5, 1994 as previously filed as an Exhibit to
Current Report on Form 8-K dated April 28, 1994.
10(r) Equity Loan Note in the principal amount of $563,000 dated April 5, 1994
as previously filed as an Exhibit to Current Report on Form 8-K dated April 28,
1994.
10(s) Subordinated Promissory Note by Columbiana Lakes Apartments, L.C., dated
April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K
dated April 28, 1994.
10(t) Limited Operating Guaranty between Anderson G. Wise, Ronald P. Curry and
the Company, dated April 5, 1994 as previously filed as an Exhibit to Current
Report on Form 8-K dated April 28, 1994.
10(u) Rockport Mortgage Corporation Mortgage Note in the principal amount of
$8,500,000 dated December 15, 1995, as previously filed as an Exhibit to Current
Report on Form 8-K dated December 15, 1995.
10(v) Equity Loan Note in the principal amount of $1,039,000 dated December 15,
1995, as previously filed as an Exhibit to Current Report on Form 8-K dated
December 15, 1995.
10(w) Subordinated Promissory Note by SCI-ROEV East Haven Land Limited
Partnership, dated December 15, 1995, as previously filed as an Exhibit to
Current Report on Form 8-K dated December 15, 1995.
10(x) Limited Operating Guaranty between SCI Real Estate Development, Ltd., and
Euro General East Haven, Inc., and the Company dated December 15, 1995, as
previously filed as an Exhibit to Current Report on Form 8-K dated December 15,
1995.
10(y) Supplemental Mortgage Note by Columbiana Lakes Limited Partnership, dated
as of April 1, 1999 incorporated by reference to Exhibit 10(y) in the Company's
September 30, 1999 Quarterly Report on Form 10-Q.
10(z) Amended and Restated Advisory Services Agreement, effective as of April 6,
1999 incorporated by reference to Exhibit 10(z) in the Company's September 30,
1999 Quarterly Report on Form 10-Q.
23(a) Consent of KPMG LLP with respect to incorporation by reference in its
report in the Company's Registration Statement on Form S-3 (filed herewith). 45
23(b) Consent of Deloitte & Touche LLP with respect to incorporation by
reference in its report in the Company's Registration Statement on Form S-3
(filed herewith). 46
99. Additional Exhibits 47
99(a) The Financial Statements of ARCap Investors, L.L.C. which invests
primarily in subordinated commercial mortgage-backed securities, as required by
Regulation S-X, Rule 3-09 (filed herewith).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN MORTGAGE ACCEPTANCE COMPANY
(Registrant)
Date: March 30, 2001 By: ______________________________
Stuart J. Boesky
Trustee, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated:
Signature Title Date
- --------------------------------------------------------------------------------
____________________ Trustee, Chairman of the Board,
Stuart J. Boesky President and Chief Executive Officer March 30, 2001
- -------------------
Peter T. Allen Trustee March 30, 2001
- -------------------
Arthur P. Fisch Trustee March 30, 2001
___________________ Senior Vice President and
Michael I. Wirth Chief Financial Officer March 30, 2001
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN MORTGAGE ACCEPTANCE COMPANY
(Registrant)
Date: March 30, 2001 By: /s/ Stuart J. Boesky
--------------------
Stuart J. Boesky
Trustee, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated:
Signature Title Date
- ---------------------------------------------------------------------------
/s/ Stuart J. Boesky Trustee, Chairman of the Board,
- --------------------
Stuart J. Boesky President and Chief Executive Officer March 30, 2001
/s/ Peter T. Allen
- ------------------
Peter T. Allen Trustee March 30, 2001
/s/ Arthur P. Fisch
- -------------------
Arthur P. Fisch Trustee March 30, 2001
/s/ Michael I. Wirth Senior Vice President and
- --------------------
Michael I. Wirth Chief Financial Officer March 30, 2001