UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
July 17, 2003
(Date of Report (Date of Earliest Event Reported))
MUNICIPAL MORTGAGE & EQUITY, LLC
(Exact Name of Registrant as Specified in Its Charter)
Delaware 011-11981 52-1449733
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification No.)
organization)
218 North Charles Street, Suite 500, 21201
Baltimore, Maryland
(Address of Principal Executive Offices) (Zip Code)
(443) 263-2900
(Registrant's Telephone Number,including Area Code)
Exhibit 99.1 to this Form 8-K/A amends and restates Exhibit 99.1 to the Form 8-K
filed by Municipal Mortgage & Equity, LLC on July 17, 2003.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description of Document
99.1 Earnings Package, dated June 30, 2003
99.2 Earnings Press Release and Financial
Statements, dated June 30, 2003
99.3 Production Press Release,
dated June 30, 2003
Item 12. Results of Operations and Financial Condition.
On July 17, 2003, Municipal Mortgage & Equity, LLC (the "Company"),
distributed an earnings package to Analysts relating to the Company's financial
performance for the quarter ended June 30, 2003. A copy of the package, dated
June 30, 2003, is attached hereto as Exhibit 99.1.
On July 17, 2003, the Company distributed an earnings press release and
financial statements relating to the Company's financial performance for the
quarter ended June 30, 2003. A copy of the press release and financial
statements, dated June 30, 2003, is attached hereto as Exhibit 99.2.
On July 17, 2003, the Company distributed a production press release
relating to the Company's production volume for the quarter ended June 30, 2003.
A copy of the press release, dated June 30, 2003, is attached hereto as Exhibit
99.3.
Exhibit 99.1
------------
MUNICIPAL MORTGAGE AND EQUITY, LLC
EARNINGS PACKAGE
QUARTER ENDED JUNE 30, 2003
TABLE OF CONTENTS
GAAP Income Statement for the three and
six months ended June 30, 2003 Page 6
Variance Analysis for GAAP Page 7
Rolling Five Quarters - GAAP Page 9
Calculation of Diluted Earnings Per Share Page 10
GAAP Net Income to CAD reconcilation for
the Rolling Five Quarters Page 11
CAD Statement for the three and six months
ended June 30, 2003 Page 13
Variance Analysis for CAD Page 14
Rolling Five Quarters - CAD Page 16
Condensed Balance Sheets and Book Value Per Share Page 17
Summary of 2nd Quarter 2003 Investment Activity Page 18
Participating Portfolio Property Net Operating
Income Trends Page 19
Units and Average Rents for Bond Portfolio Page 20
Conference Call Script - Combined Tax Credit Equity Business Page 26
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
For the three months ended For the six months ended
June 30, June 30,
----------------------------- -----------------------------
2003 2002 2003 2002
------------- -------------- ------------- --------------
INCOME:
Interest income
Interest on bonds and residual interests in bond securitizations $ 13,929 $ 15,399 $ 29,914 $ 30,561
Interest on loans 7,563 8,594 17,066 17,024
Interest on short-term investments 332 244 524 731
------------- -------------- ------------- --------------
Total interest income 21,824 24,237 47,504 48,316
------------- -------------- ------------- --------------
Fee income
Syndication fees 1,825 2,380 3,236 3,998
Origination fees 2,219 1,505 2,917 2,594
Loan servicing fees 1,838 1,660 3,747 3,568
Asset management and advisory fees 1,198 1,040 2,274 1,907
Other income 3,309 1,259 5,506 2,404
------------- -------------- ------------- --------------
Total fee income 10,389 7,844 17,680 14,471
------------- -------------- ------------- --------------
Net gain on sales 1,453 703 2,731 2,869
------------- -------------- ------------- --------------
Total income 33,666 32,784 67,915 65,656
------------- -------------- ------------- --------------
EXPENSES:
Interest expense 8,724 8,487 19,092 17,459
Salaries and benefits 8,671 5,930 14,637 10,757
General and administrative 2,113 1,697 3,938 3,423
Professional fees 877 1,967 1,866 2,604
Amortization of mortgage servicing rights and other intangibles 414 333 803 651
------------- -------------- ------------- --------------
Total expenses 20,799 18,414 40,336 34,894
------------- -------------- ------------- --------------
Net holding gains (losses) on derivatives (2,449) (7,721) 424 (4,609)
Impairments and valuation allowances related to investments (1,144) - (1,144) (110)
Net gains (losses) from equity investments in partnerships (1,606) 94 (2,353) (229)
Income tax benefit (expense) 540 (828) 472 (1,859)
Income allocable to preferred shareholders and minority interests in
subsidiary companies (2,854) (2,995) (5,679) (5,989)
------------- -------------- ------------- --------------
Net income from continuing operations 5,354 2,920 19,299 17,966
Discontinued operations 25,748 - 25,748 -
------------- -------------- ------------- --------------
Net Income $ 31,102 $ 2,920 $ 45,047 $ 17,966
============= ============== ============= ==============
LESS:
Net income allocable to term growth shares - - - 153
------------- -------------- ------------- --------------
Net income allocated to common shares $ 31,102 $ 2,920 $ 45,047 $ 17,813
============= ============== ============= ==============
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Net income from continuing operations $ 0.19 $ 0.12 $ 0.69 $ 0.73
Discontinued operations 0.89 - 0.91 -
------------- -------------- ------------- --------------
Basic earnings per common share $ 1.08 $ 0.12 $ 1.60 $ 0.73
============= ============== ============= ==============
Weighted average common shares outstanding 28,857,305 25,252,124 28,104,281 24,423,091
Diluted earnings per common share:
Net income from continuing operations $ 0.18 $ 0.11 $ 0.68 $ 0.71
Discontinued operations 0.88 - 0.90 -
------------- -------------- ------------- --------------
Diluted earnings per common share $ 1.06 $ 0.11 $ 1.58 $ 0.71
============= ============== ============= ==============
Weighted average common shares outstanding 29,213,062 25,835,808 28,451,480 25,022,631
VARIANCE ANALYSIS FOR GAAP
2nd Quarter 2003 Compared to 2nd Quarter 2002:
Total income for the second quarter of 2003 increased $0.9 million over the same
period last year due primarily to the following changes: (1) a $2.1 million
increase in other income due primarily to: (i) a $1.0 million fee collected on a
conventional equity deal; (ii) $0.8 million collected as the result of a
collateral release after the sale of a property; (iii) $0.8 million in
prepayment fees collected from the early payment of tax-exempt bond investments;
and (iv) a $0.5 million decrease in commission income; (2) a $0.8 million
increase in net gain on sales due to the termination of interest rate swaps; (3)
a $0.7 million increase in origination fees due to increased volume; and (4) a
$2.5 million decrease in accrual of interest on bonds, residual interests in
bond securitizations and loans.
Total expenses for the second quarter increased $2.4 million over the same
period last year due primarily to the following changes: (1) a $2.7 million
increase in salaries and benefits resulting from a $0.8 million increase in
salaries and other compensation and a $2.0 million increase in bonus expense;
(2) a $0.4 million increase in general and administrative expenses due primarily
to: (i) increases totaling $0.3 million due to telephone, bank fees, memberships
and dues and costs related to the integration of HCI; and (ii) a $0.1 million
increase in travel and entertainment; (3) a $0.2 million increase in interest
expense associated with an increase in financing costs related to
on-balance-sheet securitizations and larger average notes payable balances
outstanding during the quarter; and (4) a $1.1 million decrease in professional
fees due primarily to: (i) a $0.5 million decrease in commission expense; and
(ii) a $0.4 million decrease in legal fees due to information systems and other
corporate initiatives in the prior year. Commission expense is no longer
incurred by the Company because the pass-through of commission income and
expense has been transferred to the syndicated tax credit equity funds.
The Company recorded net holding losses of $2.4 million for the change in market
value of the Company's derivative financial instruments, which is a $5.3 million
decrease from the same period of 2002 due primarily to the termination of
interest rate swaps. The Company recorded impairments totaling $1.1 million on
one bond and three taxable loans. Losses from equity investments totaled $1.6
million, which is a $1.7 million increase from the same period of 2002 due to
losses from the CAPREIT Tera investment and warehoused tax credit equity
properties. The Company also recorded $0.5 million in income tax benefit. Income
tax expense decreased $1.4 million from the same period in 2002 primarily as a
result of taxable losses generated by the CAPREIT investments.
The Company also recorded $25.7 million in discontinued operations resulting
from the sale of a property that was previously held by the Company.
Year-to-Date 2003 Compared to Year-to-Date 2002:
Total income for the six months ended June 30, 2003 increased $2.3 million over
the same period last year due primarily to the following changes: (1) a $3.1
million increase in other income due primarily to: (i) $1.6 million in fees
collected on a conventional equity deal; (ii) $1.7 million in prepayment fees
collected from the early payment of tax-exempt bond investments; (iii) $0.8
million collected as the result of a collateral release after the sale of a
property; and (iv) a $1.0 million decrease in commission income; and (2) a $0.8
million decrease in syndication fees due to a decrease in the volume of
syndications closed combined with taking $0.5 million in organizational and
offering cost reimbursements related to closed syndicated tax credit equity
funds into income during the first quarter of 2002, whereas no such fees were
recognized during 2003.
Total expenses for the six months ended June 30, 2003 increased $5.4 million
over the same period last year due primarily to the following changes: (1) a
$3.9 million increase in salaries and benefits resulting from a $1.0 million
increase in salaries and other compensation and a $2.9 million increase in bonus
expense; (2) a $1.6 million increase in interest expense associated with an
increase in financing costs related to on-balance-sheet securitizations and
larger average notes payable balances outstanding during the quarter; (3) a $0.5
million increase in general and administrative expenses due primarily to: (i)
increases totaling $0.4 million due to telephone, bank fees, letter of credit
fees, memberships and dues and costs related to the integration of HCI; and (ii)
a $0.1 million increase in investment acquisition expenses; and (4) a $0.7
million decrease in professional fees due primarily to: (i) a $1.0 million
decrease in commission expense and (ii) a $0.3 million increase in consulting
fees due to an internal controls project and research related to the HCI
acquisition.
The Company recorded net holding losses of $0.4 million for the change in market
value of the Company's derivative financial instruments, which is a $5.0 million
decrease from the $4.6 million of losses recorded in 2002 due primarily to the
termination of interest rate swaps. The Company recorded impairments totaling
$1.1 million on one bond and three taxable loans. Losses from equity investments
totaled $2.4 million, which is a $2.1 million increase from the same period of
2002 due to losses from the CAPREIT Tera investment and warehoused tax credit
equity properties. The Company also recorded $0.5 million in income tax benefit.
Income tax expense decreased $2.3 million from 2002 primarily as a result of
taxable losses generated by the CAPREIT investments.
The Company also recorded $25.7 million in discontinued operations resulting
from the sale of a property that was previously held by the Company.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
INCOME: 06/30/03 03/31/03 12/31/02 09/30/02 06/30/02
-------------- -------------- ------------- ------------- -------------
Interest income
Interest on bonds and residual interests in
bond securitizations $ 13,929 $ 15,985 $ 13,953 $ 15,409 $ 15,399
Interest on loans 7,563 9,503 9,195 8,676 8,594
Interest on short-term investments 332 192 264 260 244
-------------- -------------- ------------- ------------- -------------
Total interest income 21,824 25,680 23,412 24,345 24,237
-------------- -------------- ------------- ------------- -------------
Fee income
Syndication fees 1,825 1,411 2,456 767 2,380
Origination fees 2,219 698 2,023 2,014 1,505
Loan servicing fees 1,838 1,909 1,711 1,544 1,660
Asset management and advisory fees 1,198 1,076 1,011 969 1,040
Other income 3,309 2,197 1,132 899 1,259
-------------- -------------- ------------- ------------- -------------
Total fee income 10,389 7,291 8,333 6,193 7,844
-------------- -------------- ------------- ------------- -------------
Net gain on sales 1,453 1,278 5,032 657 703
-------------- -------------- ------------- ------------- -------------
Total income 33,666 34,249 36,777 31,195 32,784
-------------- -------------- ------------- ------------- -------------
EXPENSES:
Interest expense 8,724 10,368 10,366 8,771 8,487
Salaries and benefits 8,671 5,966 6,475 5,446 5,930
General and administrative 2,113 1,825 1,880 1,756 1,697
Professional fees 877 989 1,472 884 1,967
Amortization of mortgage servicing rights and
other intangibles 414 389 329 334 333
-------------- -------------- ------------- ------------- -------------
Total expenses 20,799 19,537 20,522 17,191 18,414
-------------- -------------- ------------- ------------- -------------
Net holding gains (losses) on derivatives (2,449) 2,873 (333) (9,921) (7,721)
Impairments and valuation allowances related to
investments (1,144) - (620) - -
Net gains (losses) from equity investments in
partnerships (1,606) (747) (1,341) (1,487) 94
Income tax benefit (expense) 540 (68) (260) 635 (828)
Income allocable to preferred shareholders and
minority interests in subsidiary companies (2,854) (2,825) (2,955) (2,994) (2,995)
-------------- -------------- ------------- ------------- -------------
Net income from continuing operations 5,354 13,945 10,746 237 2,920
Discontinued operations 25,748 - - - -
-------------- -------------- ------------- ------------- -------------
Net income allocated to common shares $ 31,102 $ 13,945 $ 10,746 $ 237 $ 2,920
============== ============== ============= ============= =============
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Net income from continuing operations $ 0.19 $ 0.51 $ 0.42 $ 0.01 $ 0.12
Discontinued operations 0.89 - - - -
-------------- -------------- ------------- ------------- -------------
Basic earnings per common share $ 1.08 $ 0.51 $ 0.42 $ 0.01 $ 0.12
============== ============== ============= ============= =============
Weighted average common shares outstanding 28,857,305 27,342,870 25,426,254 25,329,103 25,252,124
Diluted earnings per common share:
Net income from continuing operations $ 0.18 $ 0.50 $ 0.41 $ 0.01 $ 0.11
Discontinued operations 0.88 - - - -
-------------- -------------- ------------- ------------- -------------
Diluted earnings per common share $ 1.06 $ 0.50 $ 0.41 $ 0.01 $ 0.11
============== ============== ============= ============= =============
Weighted average common shares outstanding 29,213,062 27,681,511 25,917,641 25,916,151 25,835,808
Note: Certain prior quarter amounts have been reclassified to conform to the 06/30/03 presentation.
Municipal Mortgage & Equity, LLC
Reconciliation of Basic and Diluted EPS
(unaudited)
For the three months ended June 30, 2003 For the three months ended June 30, 2002
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount
(Numerator) (Denominator) Amount
------------------------------------------ -------------------------------------------
(in thousands, except share and per share data)
Basic EPS
Net income from continuing operations $ 5,354 $ 0.19 $ 2,920 $ 0.12
Discontinued operations 25,748 0.89 - -
------------ ----------- ----------- ------------
Income allocable to common shares $ 31,102 28,857,305 $ 1.08 $ 2,920 25,252,124 $ 0.12
============ =========== =========== ============
Effect of Dilutive Securities
Options and deferred shares 355,757 450,829
Earnings contingency - 132,855
--------------- --------------
Diluted EPS
Net income from continuing operations $ 5,354 $ 0.18 $ 2,920 $ 0.11
Discontinued operations 25,748 0.88 - -
------------ ----------- ------------- ------------
Income allocable to common shares
plus assumed conversions $ 31,102 29,213,062 $ 1.06 $ 2,920 25,835,808 $ 0.11
============ =============== =========== ============= ============== ============
For the six months ended June 30, 2003 For the six months ended June 30, 2002
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount
(Numerator) (Denominator) Amount
------------------------------------------ -------------------------------------------
(in thousands, except share and per share data)
Basic EPS
Net income from continuing operations $ 19,299 $ 0.69 $ 17,813 $ 0.73
Discontinued operations 25,748 0.91 - -
------------ ----------- ----------- ------------
Income allocable to common shares $ 45,047 28,104,281 $ 1.60 $ 17,813 24,423,091 $ 0.73
============ =========== ============
Effect of Dilutive Securities
Options and deferred shares 347,199 466,685
Earnings contingency - 132,855
--------------- --------------
Diluted EPS
Net income from continuing operations $ 19,299 $ 0.68 $ 17,813 $ 0.71
Discontinued operations 25,748 0.90 - -
------------ ----------- ----------- ------------
Income allocable to common shares
plus assumed conversions $ 45,047 28,451,480 $ 1.58 $ 17,813 25,022,631 $ 0.71
============ =============== =========== ============= ============== ============
MUNICIPAL MORTGAGE & EQUITY, LLC
RECONCILIATION OF GAAP INCOME TO CASH AVAILABLE FOR DISTRIBUTION
(In thousands)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
INCOME: 06/30/03 03/31/03 12/31/02 09/30/02 06/30/02
--------------- -------------- -------------- -------------- --------------
Interest income
Interest on bonds and residual
interests in bond securitizations $ 13,929 $ 15,985 $ 13,953 $ 15,409 $ 15,399
Interest on loans 7,563 9,503 9,195 8,676 8,594
Interest on short-term investments 332 192 264 260 244
--------------- -------------- -------------- -------------- --------------
Total interest income 21,824 25,680 23,412 24,345 24,237
--------------- -------------- -------------- -------------- --------------
Fee income
Syndication fees 1,825 1,411 2,456 767 2,380
Origination fees 2,219 698 2,023 2,014 1,505
Loan servicing fees 1,838 1,909 1,711 1,544 1,660
Asset management and advisory fees 1,198 1,076 1,011 969 1,040
Other income 3,309 2,197 1,132 899 1,259
--------------- -------------- -------------- -------------- --------------
Total fee income 10,389 7,291 8,333 6,193 7,844
--------------- -------------- -------------- -------------- --------------
Net gain on sales 1,453 1,278 5,032 657 703
--------------- -------------- -------------- -------------- --------------
Total income 33,666 34,249 36,777 31,195 32,784
--------------- -------------- -------------- -------------- --------------
EXPENSES:
Interest expense 8,724 10,368 10,366 8,771 8,487
Salaries and benefits 8,671 5,966 6,475 5,446 5,930
General and administrative 2,113 1,825 1,880 1,756 1,697
Professional fees 877 989 1,472 884 1,967
Amortization of mortgage servicing rights
and other intangibles 414 389 329 334 333
--------------- -------------- -------------- -------------- --------------
Total expenses 20,799 19,537 20,522 17,191 18,414
--------------- -------------- -------------- -------------- --------------
Net holding gains (losses) on derivatives (2,449) 2,873 (333) (9,921) (7,721)
Impairments and valuation allowances related
to investments (1,144) - (620) - -
Net gains (losses) from equity investments
in partnerships (1,606) (747) (1,341) (1,487) 94
Income tax benefit (expense) 540 (68) (260) 635 (828)
Income allocable to preferred shareholders
and minority interests in subsidiary companies (2,854) (2,825) (2,955) (2,994) (2,995)
--------------- -------------- -------------- -------------- --------------
Net income from continuing operations 5,354 13,945 10,746 237 2,290
Discontinued operations 25,748 - - - -
--------------- -------------- -------------- -------------- --------------
Net income allocated to common shares $ 31,102 $ 13,945 $ 10,746 $ 237 $ 2,920
=============== ============== ============== ============== ==============
Conversion to Cash Available for Distribution:
(1)Mark to market adjustments $ 2,449 $ (2,873) $ 333 $ 9,921 $ 7,721
(2)Equity investments 3,181 2,409 2,837 3,247 79
(3)Net gain on sales (10,486) (327) (3,395) (450) (601)
(3)Amortization of capitalized mortgage
servicing fees 414 352 329 334 333
(4)Origination fees and other income, net 1,335 282 1,376 54 1,450
(5)Valuation allowances and
other-than-temporary impairments 1,097 - 620 - -
(6)Deferred tax expense 984 628 703 (462) 483
(7)Discontinued operations (25,748) - - - -
(7)Interest income 10,793 - - - -
--------------- -------------- -------------- -------------- --------------
Cash Available for Distribution (CAD) $ 15,121 $ 14,416 $ 13,549 $ 12,881 $ 12,385
=============== ============== ============== ============== ==============
Notes
(1) For GAAP reporting, the Company records the non-cash change in fair value
of its investment in interest rate swaps and other derivative financial
instruments through net income. These non-cash gains and losses are not
included in the Company's calculation of CAD.
(2) For GAAP reporting, the Company accounts for various investments in
partnerships using the equity accounting method. As a result, the Company's
allocable share of the income or loss from the partnerships is reported in
income (losses) from equity investments in partnerships. The income from
these partnerships includes depreciation expense and changes in the fair
value of investments in derivatives. For GAAP reporting, distributions are
treated as a return of capital. For CAD reporting, the Company records the
cash distributions it receives from the partnerships as other income. In
addition, a portion of the income or loss from partnerships is reduced by a
minority interest for both GAAP and CAD.
(3) For GAAP reporting, the Company recognizes non-cash gains and losses
associated with the sale of assets or capitalization of mortgage servicing
rights. The capitalized mortgage servicing rights are amortized into
expense over the estimated life of the serviced loans. The non-cash gains
and the associated amortization expense are not included in CAD.
(4) Origination fees and certain other income amounts are recognized as income
when received for CAD purposes, but for GAAP reporting these items are
deferred and amortized into income over the life of the associated
investment. This adjustment represents the net difference, for the relevant
period, between fees taken into income when received for CAD and the
amortization of fees recorded for GAAP.
(5) For GAAP reporting, the Company records valuation allowances and
other-than-temporary impairments on its investments in loans, bonds and
other bond-related investments. Such non-cash charges do not affect the
cash flow generated from the operation of the underlying properties,
distributions to shareholders, or the tax-exempt status of the income of
the financial obligation under the bonds. Therefore, these items are not
included in the calculation of CAD.
(6) For GAAP reporting, the Company's income tax expense contains both a
current and a deferred component. Only the Company's current income tax
expense is reflected in CAD.
(7) For GAAP reporting, the Company recognized a gain upon the sale of a
property. This gain was required to be classified as discontinued
operations because the Company owned the property prior to the sale. For
CAD reporting, the gain was significantly less due to recording a portion
of the proceeds as interest income. In addition, the carrying value of the
tax-exempt bond associated with the property was significantly more for CAD
due to an impairment previously recognized for GAAP.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(Unaudited) (In
thousands, except share and per share
data)
For the three months ended For the six months ended
June 30, June 30,
---------------------------- ---------------------------
2003 2002 2003 2002
------------ -------------- ------------- ------------
SOURCES OF CASH:
Interest on bonds, residual interests in bond securitizations and loans $ 31,597 $ 23,377 $ 56,445 $ 46,340
Interest on short-term investments 332 244 524 731
Syndication fees 1,825 2,380 3,236 3,998
Origination fees 2,711 3,005 3,871 4,513
Loan servicing fees 1,835 1,660 3,744 3,568
Asset management and advisory fees 1,198 1,040 2,274 1,907
Distributions from equity investments in partnerships 1,716 173 3,547 290
Other income 4,221 1,238 6,312 2,584
Net gain (loss) on sales (9,033) 102 (8,082) 142
------------ -------------- ------------- ------------
TOTAL SOURCES OF CASH 36,402 33,219 71,871 64,073
------------ -------------- ------------- ------------
EXPENSES:
Interest expense 8,102 7,900 17,941 16,190
Salaries and benefits 8,671 5,930 14,637 10,757
Professional fees 877 1,967 1,866 2,604
General and administrative 2,113 1,697 3,938 3,423
Loan loss expense 47 - 47 -
Income tax expense (benefit) (1,524) 345 (2,084) 759
------------ -------------- ------------- ------------
TOTAL EXPENSES 18,286 17,839 36,345 33,733
------------ -------------- ------------- ------------
CASH AVAILABLE FOR DISTRIBUTION 18,116 15,380 35,526 30,340
------------ -------------- ------------- ------------
LESS:
Cash allocable to preferred shareholders and term growth shares,
including preferred shareholders in a subsidiary company 2,995 2,995 5,989 6,142
------------ -------------- ------------- ------------
CASH AVAILABLE FOR DISTRIBUTION TO COMMON SHARES $ 15,121 $ 12,385 $ 29,537 $ 24,198
============ ============== ============= ============
CAD PER COMMON SHARE $ 0.52 $ 0.49 $ 1.02 $ 0.96
============ ============== ============= ============
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 15,121 $ 12,385 $ 29,537 $ 24,198
============ ============== ============= ============
ACTUAL AMOUNT PAID $ 12,903 $ 11,072 $ 25,740 $ 22,040
============ ============== ============= ============
PAYOUT RATIO 85.3% 89.4% 87.3% 91.1%
============ ============== ============= ============
COMMON SHARES OUTSTANDING 28,832,443 25,308,022
============ ==============
CASH DISTRIBUTION PER COMMON SHARE $ 0.4475 $ 0.4375 $ 0.8925 $ 0.8725
============ ============== ============= ============
The primary differences between Net Income as calculated under generally
accepted accounting principles ("GAAP") and Cash Available For Distribution
("CAD") result from the timing of income and expense recognition and non-cash
events. These differences between CAD and GAAP income include the treatment of
loan origination fees, which for CAD purposes are recognized when received but
for GAAP purposes are amortized over the life of the associated loan. In
addition, there are differences related to non-cash gains and losses associated
with bond valuations and sales, non-cash gains and losses associated with
changes in market value of derivative financial instruments, amortization of
goodwill and intangibles and capitalization of mortgage servicing rights, net of
deferred taxes for GAAP purposes, which are not included in the calculation of
CAD.
The common shares outstanding reported for Cash Available for Distribution
are the actual shares outstanding at the end of the quarter. For GAAP, the
weighted average shares outstanding during the period are reported for the basic
net income per share calculation. The weighted average shares outstanding for
diluted net income per share include the potential dilutive effect from the
exercise of options, vesting of restricted shares, conversion of the preferred
shares and provision for shares to be awarded under the Midland acquisition earn
out provision.
VARIANCE ANALYSIS FOR CAD
2nd Quarter 2003 Compared to 2nd Quarter 2002:
Total income for the second quarter of 2003 increased $3.2 million over the same
period last year due primarily to the following changes: (1) an $8.2 million
increase in interest on bonds, residual interests in bond securitizations and
loans due primarily to: (i) $10.8 million of deferred base interest and yield
maintenance collected upon the sale of a property; offset by (ii) $1.0 million
of interest that was reclassified to other income due to the Company holding the
property prior to sale to a third party; and (iii) a $1.6 million decrease in
collections of interest on bonds, residual interests in bond securitizations and
loans; (2) a $3.0 million increase in other income due primarily to: (i) a $1.0
million fee collected on a conventional equity deal; (ii) $1.0 million of
interest collected from a property that was held by the Company prior to sale to
a third party; (iii) $0.8 million collected as the result of a collateral
release after the sale of a property; (iv) $0.8 million in prepayment fees
collected from the early payment of tax-exempt bond investments; and (v) a $0.5
million decrease in commission income; (3) a $1.5 million increase in
distributions from equity investments in partnerships due primarily to an
increase in income from the CAPREIT investments; (4) a $9.1 million decrease in
net gain (loss) on sales due primarily to a $10.8 million loss on the
termination of interest rate swaps offset in part by a $1.5 million gain
recorded on the payoff of the tax-exempt bond and taxable loan on a property
that was sold during the quarter; and (5) a $0.6 million decrease in syndication
fees due to a decrease in the volume of syndications closed.
Total expenses for the second quarter increased $0.4 million over the same
period last year due primarily to the following changes: (1) a $2.7 million
increase in salaries and benefits resulting from a $0.8 million increase in
salaries and other compensation and a $2.0 million increase in bonus expense;
(2) a $0.4 million increase in general and administrative expenses due primarily
to: (i) increases totaling $0.3 million due to telephone, bank fees, memberships
and dues and costs related to the integration of HCI; and (ii) a $0.1 million
increase in travel and entertainment; (3) a $0.2 million increase in interest
expense associated with an increase in financing costs related to
on-balance-sheet securitizations and larger average notes payable balances
outstanding during the quarter; (4) a $1.9 million decrease in income tax
expense primarily as a result of taxable losses generated by the CAPREIT
investments; and (5) a $1.1 million decrease in professional fees due primarily
to: (i) a $0.5 million decrease in commission expense; and (ii) a $0.4 million
decrease in legal fees due to information systems and other corporate
initiatives in the prior year. Commission expense is no longer incurred by the
Company because the pass-through of commission income and expense has been
transferred to the syndicated tax credit equity funds.
Year-to-Date 2003 Compared to Year-to-Date 2002:
Total income for the six months ended June 30, 2003 increased $7.8 million over
the same period last year due primarily to the following changes: (1) a $10.1
million increase in interest on bonds, residual interests in bond
securitizations and loans due primarily to: (i) $10.8 million of deferred base
interest and yield maintenance collected upon the sale of a property; partially
offset by (ii) $1.0 million of interest that was reclassified to other income
due to the Company holding the property prior to sale to a third party; (2) a
$3.7 million increase in other income due primarily to: (i) $1.7 million in
prepayment fees collected from the early payment of tax-exempt bond investments;
(ii) $1.6 million in fees collected on a conventional equity deal; (iii) $1.0
million of interest collected from a property that was held by the Company prior
to sale to a third party; (iv) $0.8 million collected as the result of a
collateral release after the sale of a property; (v) a $1.0 million decrease in
commission income; and (vi) a $0.3 million decrease in the collection of loan
related fees such as cancellation, application and extension fees; (3) a $3.3
million increase in distributions from equity investments in partnerships due
primarily to an increase in income from the CAPREIT investments; (4) an $8.2
million decrease in net gain (loss) on sales due primarily to: (i) a $10.8
million loss on the termination of interest rate swaps; (ii) a $1.5 million gain
recorded on the payoff of the tax-exempt bond and taxable loan on a property
that was sold; and (iii) a $1.1 million increase in gain on sales related to an
increase in premiums on the delivery of loans to HUD and gain on sale on
delivery of loans to a new conduit lender; (5) a $0.8 million decrease in
syndication fees due to a decrease in the volume of syndications closed combined
with taking $0.5 million in organizational and offering cost reimbursements
related to closed syndicated tax credit equity funds into income during the
first quarter of 2002, whereas no such fees were recognized during 2003; and (6)
a $0.6 million decrease in origination fees due primarily to an origination fee
recognized on the CAPREIT transaction in 2002.
Total expenses for the six months ended June 30, 2003 increased $2.6 million
over the same period last year due primarily to the following changes: (1) a
$3.9 million increase in salaries and benefits resulting from a $1.0 million
increase in salaries and other compensation and a $2.9 million increase in bonus
expense; (2) a $1.8 million increase in interest expense associated with an
increase in financing costs related to on-balance-sheet securitizations and
larger average notes payable balances outstanding during the quarter; (3) a $0.5
million increase in general and administrative expenses due primarily to: (i)
increases totaling $0.4 million due to telephone, bank fees, letter of credit
fees, memberships and dues and costs related to the integration of HCI; and (ii)
a $0.1 million increase in investment acquisition expenses; (4) a $2.8 million
decrease in income tax expense primarily as a result of tax losses generated by
the CAPREIT investments; and (5) a $0.7 million decrease in professional fees
due primarily to: (i) a $1.0 million decrease in commission expense; and (ii) a
$0.3 million increase in consulting fees due to an internal controls project and
the HCI acquisition.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(In thousands, except share and per share data)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
06/30/03 03/31/03 12/31/02 09/30/02 06/30/02
------------- ------------- ------------- ------------- -------------
SOURCES OF CASH:
Interest on bonds, residual interests in bond
securitizations and loans $ 31,597 $ 24,848 $ 22,596 $ 23,331 $ 23,377
Interest on short-term investments 332 192 264 260 244
Syndication fees 1,825 1,411 2,456 767 2,380
Origination fees 2,711 1,160 3,007 2,206 3,005
Loan servicing fees 1,835 1,909 1,711 1,544 1,660
Asset management and advisory fees 1,198 1,076 1,011 969 1,040
Distributions from equity investments in partnerships 1,716 1,831 1,535 1,760 173
Other income 4,221 2,091 1,609 878 1,238
Net gain (loss) on sales (9,033) 951 1,637 207 102
------------- ------------- ------------- ------------- -------------
TOTAL SOURCES OF CASH 36,402 35,469 35,826 31,922 33,219
------------- ------------- ------------- ------------- -------------
EXPENSES:
Interest expense 8,102 9,839 9,899 8,134 7,900
Salaries and benefits 8,671 5,966 6,475 5,446 5,930
Professional fees 877 989 1,472 884 1,967
General and administrative 2,113 1,825 1,880 1,756 1,697
Loan loss expense 47 - - - -
Income tax expense (benefit) (1,524) (560) (443) (173) 345
------------- ------------- ------------- ------------- -------------
TOTAL EXPENSES 18,286 18,059 19,283 16,047 17,839
------------- ------------- ------------- ------------- -------------
CASH AVAILABLE FOR DISTRIBUTION 18,116 17,410 16,543 15,875 15,380
LESS:
Cash allocable to preferred shareholders in a
subsidiary company and term growth shares 2,995 2,994 2,994 2,994 2,995
------------- ------------- ------------- ------------- -------------
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 15,121 $ 14,416 $ 13,549 $ 12,881 $ 12,385
============= ============= ============= ============= =============
CAD PER COMMON SHARE $ 0.52 $ 0.50 $ 0.53 $ 0.51 $ 0.49
============= ============= ============= ============= =============
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 15,121 $ 14,416 $ 13,549 $ 12,881 $ 12,385
============= ============= ============= ============= =============
ACTUAL AMOUNT PAID $ 12,903 $ 12,837 $ 11,304 $ 11,154 $ 11,072
============= ============= ============= ============= =============
PAYOUT RATIO 85.3% 89.0% 83.4% 86.6% 89.4%
============= ============= ============= ============= =============
COMMON SHARES OUTSTANDING 28,832,443 28,846,327 25,546,010 25,349,585 25,308,022
============= ============= ============= ============= =============
CASH DISTRIBUTION PER COMMON SHARE $ 0.4475 $ 0.4450 $ 0.4425 $ 0.4400 $ 0.4375
============= ============= ============= ============= =============
Note: Certain prior quarter amounts have been reclassified to conform to the 06/30/03 presentation.
CAD differs from net income because of variations between GAAP income and
actual cash received. There are three primary differences between CAD and GAAP
income. The first is the treatment of loan origination fees, which for CAD
purposes are recognized as income when received but for GAAP purposes are
amortized into income over the life of the associated investment. The second
difference is the non-cash gain and loss recognized for GAAP associated with
valuations, sales of investments and capitalization of mortgage servicing
rights, which are not included in the calculation of CAD. The third difference
is the treatment of the Company's investments in partnerships. For GAAP, the
Company records its allocable share of the income (loss) from the partnership as
income, while for CAD reporting, the Company records the cash distributions it
receives from the partnership as income. For a reconciliation of GAAP net income
to CAD, see page 10.
CAD per common share is calculated based on the number of shares
outstanding at the end of each quarter. For GAAP, basic earnings per share is
calculated based on the weighted average shares outstanding during the period.
The weighted average shares outstanding for diluted earnings per share include
the potential dilutive effect from the exercise of options, vesting of
restricted shares, and provision for shares to be awarded under the Midland
acquisition earn out provision.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
June
30,
December
31,
2003 2002
---------------- ---------------
ASSETS:
Investment in tax-exempt bonds and residual interests
in bond securitizations $ 788,892 $ 781,384
Loans receivable, net 451,397 422,299
Loans receivable held for sale 11,023 39,149
Investments in partnerships 98,239 99,966
Investment in derivative financial instruments 3,170 18,762
Cash, cash equivalents and interest receivable 98,587 59,902
Other assets 115,798 97,919
Goodwill 33,607 33,537
---------------- ---------------
TOTAL $ 1,600,713 $ 1,552,918
================ ===============
LIABILITIES AND EQUITY:
Notes payable $ 436,949 $ 450,924
Short-term debt 211,670 219,945
Long-term debt 142,006 147,357
Residual interests in bond securitizations 1,343 1,447
Investment in derivative financial instruments 21,792 49,359
Other liabilities 48,150 36,370
Preferred shareholders' and minority interests' equity in subsidiary companies 160,142 160,452
Shareholders' equity 578,661 487,064
---------------- ---------------
TOTAL $ 1,600,713 $ 1,552,918
================ ===============
BOOK VALUE PER COMMON SHARE $ 20.07 $ 19.07
================ ===============
MUNICIPAL MORTGAGE & EQUITY, LLC
2003 INVESTMENTS
SECOND QUARTER
(In thousands)
BOND PRODUCTION: QUARTER YTD
PERMANENT BOND AMOUNT PRODUCTION
INTEREST ------------------------------ -------------------------
PROPERTY CITY STATE RATE CONSTRUCTION PERMANENT CONSTRUCTION PERMANENT
------------------------------- ------------ ---------- ---------------- -------------- --------------- ------------- -----------
Eden Park of Ironwood (1) Gainesville FL 7.200% $ 4,250 $ 4,250 $ 4,250 $ 17,625
Lake Pleasant Village (2) Peoria AZ 7.200% 9,450 9,450 18,800 18,800
Stapleton Denver CO 7.875% 11,000 11,000 11,000 11,000
Woodland Village (3) Leavenworth KS 6.950% 8,160 8,160 8,160 8,160
-------------- --------------- ------------- -----------
TOTAL $ 32,860 $ 32,860 $ 42,210 $ 55,585
============== =============== ============= ===========
(1) The Company's initial investment was $0.2 million. The Company earned a
1.25% origination fee on this deal. (2) The Company's initial investment was
$1.5 million. The Company earned a 1.25% origination fee on this deal. (3) The
Company's initial investment was $2.8 million. The Company earned a 1.25%
origination fee on this deal.
CONSTRUCTION/PERMANENT LENDING, SYNDICATION AND OTHER PRODUCTION:
TOTAL FEES TOTAL FEES
RECOGNIZED RECOGNIZED
QUARTER THIS QUARTER YTD YTD
VOLUME FOR CAD VOLUME FOR CAD
-------------- --------------- -------------------------
Tax Credit Equity Syndications (Equity Raised) $ 31,318 $ 1,825 $ 66,637 $ 3,236
Tax Credit Lending Production $ 65,984 $ - $ 91,757 $ -
Conventional Equity Production $ 46,865 $ 1,493 $ 50,175 $ 1,609
Taxable Construction Loan Production (generating a weighted average
spread of 1.12%) $ 93,986 $ 262 $ 132,578 $ 669
Taxable Permanent Loan Production $ 118,379 $ 1,751 $ 155,572 $ 2,314
Supplemental Loans $ 7,660 $ 125 $ 24,478 $ 353
OTHER INFORMATION:
Balance as of 6/30/03 of Midland Servicing Portfolio under Management $ 1,126,819 $ 1,068
Balance as of 6/30/03 of Midland Equity Syndication Portfolio under
Management $ 917,138 $ 854
MUNICIPAL MORTGAGE & EQUITY, LLC
PARTICIPATING BOND PORTFOLIO
NET OPERATING INCOME - TREND
As of June 30, 2003
Q2 2002 Q1 2003 Q2 2003 (2) Q2 '03/ Q2 '03/
Property Actual Actual Actual Q2 '02 Q1 '03
--------- --------- -------- ----------- -------- --------
Alban (4) 268,978 260,814 242,359 -9.9% -7.1%
Arlington (1) 0 -39,943 3,078 N/A N/A
Barkley Place 255,837 331,248 322,958 26.2% -2.5%
Barrington at Beach Street (1)(3) 41,853 201,476 275,036 557.1% 36.5%
Cobblestone 179,912 147,956 142,040 -21.1% -4.0%
Cool Springs (1) -54,690 -2,816 98,309 N/A N/A
Creekside 271,875 291,969 281,675 3.6% -3.5%
Crossings 179,332 182,192 164,531 -8.3% -9.7%
Gilman Meadows 158,870 172,281 139,078 -12.5% -19.3%
Hamilton Grove 212,804 173,874 201,481 -5.3% 15.9%
Jefferson Commons 513,627 400,144 401,808 -21.8% 0.4%
Lakeview 187,987 164,215 179,455 -4.5% 9.3%
Mallard I 25,891 38,539 23,398 -9.6% -39.3%
Mallard II 95,771 102,270 96,956 1.2% -5.2%
Montclair 288,782 344,427 379,300 31.3% 10.1%
Newport Village 242,984 193,723 215,054 -11.5% 11.0%
Nicollet Ridge 362,343 320,571 345,463 -4.7% 7.8%
Palisades Park 245,556 245,324 245,127 -0.2% -0.1%
Riverset I 316,555 376,154 372,406 17.6% -1.0%
Riverset II 139,242 162,217 146,790 5.4% -9.5%
Steeplechase Falls 377,633 343,626 391,736 3.7% 14.0%
Meadows 129,467 120,149 146,680 13.3% 22.1%
Timber Ridge 137,432 129,561 137,329 -0.1% 6.0%
Villas at LaRiviera (3) 193,778 226,573 223,566 15.4% -1.3%
Whispering Lake 326,079 316,850 337,477 3.5% 6.5%
Winter Oaks 282,800 275,783 287,367 1.6% 4.2%
-------------------------------------- ----------------------
Total 5,380,697 5,479,179 5,800,457 7.8% 5.9%
Same Store Growth 5,393,534 5,320,462 5,424,035 0.6% 1.9%
(1) In Lease-up. Quarterly totals are not included in Same Store Growth
calculations.
(2) Q2 2003 uses April and May actuals plus the June budget unless otherwise
noted.
(3) Q2 2003 - operating budget is not available, total includes April actuals
and two times May actual results.
(4) Q2 3003 - includes April actual results plus May and June budget.
Occupancy
--------------------------------------------------------
Month Ended Month Ended Month Ended Month Ended
Month/Year Apartment June 30, March 31, June 30, June 30,
Apartment Community Acquired Units 2003 2003 2002 2001
--------------------- ------------- ---------- --------------------------------------------------------
Alban Place Sep-86 194 96.0% 94.8% 94.8% 97.9%
Cobblestone Aug-99 184 95.7% 92.4% 95.1% 94.0%
Creekside Village Nov-87 296 98.3% 99.7% 99.3% 99.3%
Crossings Jan-97 200 89.5% 89.0% 95.5% 98.5%
Jefferson Commons Dec-00 173 87.9% 87.9% 91.9% 94.8%
Lakeview Sep-87 180 98.9% 96.1% 96.1% 98.9%
Timber Ridge Dec-00 168 94.0% 96.4% 97.6% 91.7%
Villas at LaRiviera Jun-99 199 80.5% 91.0% 81.5% 92.5%
-----------
Subtotal Participating Mortgage Bonds 1,594
-----------
Mortgage Bonds
Applewood (a.k.a. Paola) Jul-99 48 95.8% 93.8% 91.7% 89.6%
Autumn Oaks/Crest at Thousand Oaks Feb-03 410 100.0% 95.4% N/A N/A
Buchanan Bay Mar-01 228 86.4% 89.0% 82.0% 90.4%
Charter House (2) Dec-96 - N/A N/A N/A N/A
Cielo Vista Aug-99 378 96.3% 90.5% 95.0% 90.2%
Country Club Jul-99 101 84.2% 85.1% 90.1% 86.1%
Delta Village Jun-99 80 97.5% 95.0% 100.0% 96.3%
Elmbrooke Aug-00 54 100.0% 100.0% 100.0% 100.0%
Florida A&M Feb-00 96 57.3% 86.5% 69.8% 91.1%
Gannon (Dade) (3) Feb-98 575 96.3% 96.7% 95.5% 95.9%
Gannon (St. Louis) Feb-98 336 93.5% 93.2% 92.9% 94.9%
Hidden Valley Dec-96 82 91.5% 93.9% 92.7% 93.9%
Honey Creek Mar-99 656 89.6% 97.7% 95.1% 97.0%
Hunter's Glen Mar-01 383 75.0% N/A 86.7% 88.0%
Lake Piedmont Apr-98 648 92.1% 88.4% 95.2% 83.8%
Monroe (Oakmont, Towne Oak) Dec-98 364 93.7% 97.5% 98.9% 98.6%
Mountain View (Willowgreen) Nov-86 241 94.6% 91.3% 98.3% 94.6%
Northridge Park II Aug-87 128 99.2% 90.6% 96.9% 98.4%
Oakbrook Dec-96 170 83.5% 100.0% 95.3% 98.2%
Oklahoma City (4) Aug-98 774 90.9% 95.3% 91.3% 89.9%
Orangevale Apr-98 64 100.0% 98.4% 98.4% 100.0%
Parkwood Jun-99 180 97.2% 99.4% 97.8% 97.2%
Riverset II (1) Jan-96 - N/A N/A N/A N/A
Riverview Jun-00 228 96.1% 97.8% 50.4% N/A
Sahuarita Jun-99 52 100.0% 86.5% 100.0% 98.1%
Santa Fe Springs Jun-00 310 78.1% 77.1% 91.9% 90.6%
Shadowbrook Jun-99 193 95.3% 97.9% 97.4% 94.8%
Silver Springs Dec-99 250 92.4% 90.0% 70.0% 44.8%
Southwind Aug-00 88 100.0% 100.0% 100.0% 80.7%
Torries Chase Dec-96 99 92.9% 89.9% 92.9% 94.9%
Village Apartments May-00 210 95.2% 96.7% 96.2% 81.9%
Village at Stone Mountain Oct-97 722 84.9% 88.9% 91.6% 92.7%
Village Green Feb-00 200 81.5% 87.0% 86.5% 91.5%
Weatherstone Sep-00 100 97.0% 90.0% 91.0% N/A
Western Hills Dec-98 80 75.0% 77.5% 95.0% 97.5%
Willow Key Mar-99 384 95.3% 95.8% 99.5% 99.5%
Woodglen Dec-99 250 79.2% 82.4% 90.8% 85.6%
Woodmark Jun-99 173 97.1% 97.7% 98.3% 97.7%
-----------
Subtotal Mortgage Bonds 9,335
-----------
Participating Subordinate Mortgage Bonds:
Barkley Place May-87 156 95.5% 98.7% 89.7% 92.9%
Gilman Meadows Mar-87 125 93.6% 91.2% 90.4% 90.4%
Hamilton Chase Feb-87 300 92.7% 91.7% 93.7% 96.0%
Mallard Cove I & II Feb-87 198 94.9% 94.4% 90.4% 97.5%
Meadows Jan-88 200 93.0% 91.0% 94.0% 94.5%
Montclair Oct-86 159 93.1% 92.5% 97.5% 97.5%
Newport Village Dec-86 220 84.1% 85.5% 94.1% 98.2%
Nicollet Ridge Dec-87 339 90.9% 90.6% 92.0% 98.2%
Riverset II Jan-96 148 89.0% 90.0% 86.8% 85.6%
Steeplechase Oct-88 450 95.1% 94.0% 92.9% 92.2%
Whispering Lake Oct-87 384 93.8% 90.4% 93.5% 90.4%
-----------
Subtotal Participating Subordinate Mortgage Bonds 2,679
-----------
Avg. Monthly Rent
Per Apartment Unit
-----------------------------------------------------
Month Month Month Month
Ended Ended Ended Ended
Month/Year Apartment May 31, March 31, June 30, June 30,
Apartment Community Acquired Units 2003 2003 2002 2001
--------------------- ----------- ---------- -----------------------------------------------------
Participating Mortgage Bonds:
Alban Place Sep-86 194 927 923 924 885
Cobblestone Aug-99 184 578 581 572 561
Creekside Village Nov-87 296 595 591 559 516
Crossings Jan-97 200 754 754 749 730
Jefferson Commons Dec-00 173 1,230 1,230 1,361 1,255
Lakeview Sep-87 180 716 715 695 662
Timber Ridge Dec-00 168 467 496 464 496
Villas at LaRiviera Jun-99 199 709 702 682 626
-----------
Subtotal Participating Mortgage Bonds 1,594
-----------
Mortgage Bonds
Applewood (a.k.a. Paola) Jul-99 48 518 518 502 482
Autumn Oaks/Crest at Thousand Oaks Feb-03 410 493 560 N/A N/A
Buchanan Bay Mar-01 228 717 718 716 675
Charter House (2) Dec-96 - N/A N/A N/A N/A
Cielo Vista Aug-99 378 387 391 424 428
Country Club Jul-99 101 449 446 438 371
Delta Village Jun-99 80 584 587 578 565
Elmbrooke Aug-00 54 1,063 1,062 1,021 716
Florida A&M Feb-00 96 1,440 1,374 1,385 1,352
Gannon (Dade) (3) Feb-98 575 794 788 748 717
Gannon (St. Louis) Feb-98 336 587 586 573 548
Hidden Valley Dec-96 82 576 567 552 538
Honey Creek Mar-99 656 538 536 560 543
Hunter's Glen Mar-01 383 582 583 584 560
Lake Piedmont Apr-98 648 494 488 476 460
Monroe (Oakmont, Towne Oak) Dec-98 364 488 489 482 469
Mountain View (Willowgreen) Nov-86 241 643 643 628 603
Northridge Park II Aug-87 128 1,015 1,007 1,053 1,010
Oakbrook Dec-96 170 462 456 430 446
Oklahoma City (4) Aug-98 774 489 485 481 463
Orangevale Apr-98 64 968 968 958 915
Parkwood Jun-99 180 478 475 464 445
Riverset II (1) Jan-96 - N/A N/A N/A N/A
Riverview Jun-00 228 655 657 658 N/A
Sahuarita Jun-99 52 489 422 529 540
Santa Fe Springs Jun-00 310 594 587 592 589
Shadowbrook Jun-99 193 493 484 484 474
Silver Springs Dec-99 250 774 774 809 789
Southwind Aug-00 88 756 727 711 637
Torries Chase Dec-96 99 517 515 498 488
Village Apartments May-00 210 568 568 568 491
Village at Stone Mountain Oct-97 722 761 761 733 710
Village Green Feb-00 200 635 643 638 631
Weatherstone Sep-00 100 813 800 812 N/A
Western Hills Dec-98 80 519 515 502 497
Willow Key Mar-99 384 706 705 655 627
Woodglen Dec-99 250 672 669 641 682
Woodmark Jun-99 173 680 680 680 676
-------------
Subtotal Mortgage Bonds 9,335
-------------
Participating Subordinate Mortgage Bonds:
Barkley Place May-87 156 2,085 2,074 2,068 2,088
Gilman Meadows Mar-87 125 998 1,010 1,020 1,017
Hamilton Chase Feb-87 300 626 623 613 601
Mallard Cove I & II Feb-87 198 714 714 748 728
Meadows Jan-88 200 609 605 611 599
Montclair Oct-86 159 1,830 1,844 1,820 1,834
Newport Village Dec-86 220 850 846 839 804
Nicollet Ridge Dec-87 339 949 913 942 914
Riverset II Jan-96 148 722 711 706 702
Steeplechase Oct-88 450 611 609 590 586
Whispering Lake Oct-87 384 656 652 639 649
-----------
Subtotal Participating Subordinate Mortgage Bonds 2,679
-----------
Occupancy
--------------------------------------------------------
Month Ended Month Ended Month Ended Month Ended
Month/Year Apartment June 30, March 31, June 30, June 30,
Apartment Community Acquired Units 2003 2003 2002 2001
-------------------- ---------- ---------- --------------------------------------------------------
Subordinate Mortgage Bonds:
CAPREIT Sep-99 - N/A N/A N/A N/A
Cinnamon Ridge Jan-99 - N/A N/A N/A N/A
Farmington Meadows Aug-99 69 100.0% 100.0% 100.0% 100.0%
Independence Ridge Aug-96 336 75.0% 69.9% N/A 80.1%
Locarno Aug-96 110 90.9% 90.9% N/A 98.2%
Olde English Manor Nov-99 - N/A N/A N/A N/A
Peaks of Conyer Sep-01 260 81.2% 85.0% 87.3% N/A
Rillito Village Jul-00 - N/A N/A N/A N/A
Winter Oaks Nov-99 460 92.2% 95.4% 92.0% 91.5%
-------------
Subtotal Subordinate Mortgage Bonds 1,235
-------------
Other Bond Related Investments:
Briarwood Dec-98 600 98.3% 94.8% 97.5% 97.8%
Cinnamon Ridge Dec-97 264 97.3% 92.8% 98.1% 92.4%
Golfside Villas (f.k.a. Club West) Mar-99 194 99.5% 99.0% 99.5% 99.0%
Park at Landmark Sep-00 396 95.7% 94.2% 94.9% 100.0%
Poplar Glen Jun-97 191 93.2% 93.7% 95.8% 97.9%
RITES - Charter House Dec-96 280 91.4% 89.6% 98.2% 96.4%
RITES - Indian Lakes Jul-97 296 84.8% 75.0% 88.5% 93.6%
RITES - LaPaloma Apr-99 120 98.3% 100.0% 99.2% 91.7%
RITES - LeMirador (Coleman Senior) Apr-98 141 83.7% 87.2% 92.9% 97.9%
RITES - Museum Towers Apr-01 286 96.2% 93.0% 87.4% 98.3%
RITES - Olde English Manor Jun-98 264 79.5% 82.2% 90.5% 95.1%
RITES - Palisades Park Feb-98 304 93.8% 96.4% 97.4% 98.4%
RITES - Pavillion Apr-99 132 100.0% 99.2% 100.0% 100.0%
RITES - Queen Anne IV Jul-98 110 91.8% 82.7% 96.4% 100.0%
RITES - Rancho/Villas May-00 417 88.6% 86.6% 92.1% 90.6%
RITES - Rillito Village Aug-98 272 91.5% 91.2% 91.2% 88.2%
RITES - Riverset (1) Aug-88 352 89.0% 90.0% 86.8% 85.6%
RITES - Riverset II (1) Jan-96 - N/A N/A N/A N/A
RITES - Sienna (a.k.a. Italian Gardens) Apr-98 140 90.0% 91.4% 83.6% 97.9%
RITES - Sonterra May-98 156 87.8% 90.4% 94.2% 90.4%
RITES - Southgate Crossings Jun-97 215 98.1% 94.0% 97.2% 98.6%
RITES - Southwood Nov-97 1,286 72.0% 74.2% 85.6% 85.1%
-----------
Subtotal Other Bond Related Investments 6,416
-----------
Total Units/Weighted Average Investments 21,259 90.1% 90.7% 92.2% 92.5%
===========
Total/Same Stores (5) 2001 20,261 89.9% 88.9% 90.7% 92.5%
Total/Same Stores (5) 2002 20,403 90.1% 89.2% 92.2%
Construction/Substantial Rehab Properties and Other Investments
Arlington Dec-00 176 34.1% 31.8% N/A N/A
Barrington at Beach Street Oct-00 398 65.1% 59.5% 39.2% N/A
Bedford Park Oct-00 312 69.6% 64.1% 75.6% 36.9%
CAPREIT Joint Venture (6) Jun-02 6,279 95.6% 94.1% 96.0% N/A
CAPREIT TERA (7) Mar-01 2,942 94.1% 94.1% 93.2% N/A
Chancellor Nov-01 101 N/A N/A N/A N/A
Chancellor II Mar-02 46 N/A N/A N/A N/A
City Views at Rosa Burney Park Dec-02 180 80.6% N/A N/A N/A
Cliffs at Grove Barton Apr-03 132 N/A N/A N/A N/A
Cool Springs Aug-00 124 54.8% 53.2% 28.2% N/A
Coronel Village Apr-02 48 N/A N/A N/A N/A
Eden Park May-03 104 N/A N/A N/A N/A
Fort Branch Dec-00 250 88.0% 69.2% 19.6% N/A
Hidden Brooks Sep-01 201 76.6% 84.6% 80.6% N/A
Jefferson at Town Lake Dec-02 216 N/A N/A N/A N/A
Lake Pleasant Village May-03 152 N/A N/A N/A N/A
Las Trojas Mar-02 49 N/A N/A N/A N/A
Liberty Park Townhomes Feb-03 184 64.7% 72.3% N/A N/A
Lincoln Corner Dec-01 134 N/A N/A N/A N/A
Meridian at Bridgewater Nov-99 90 82.2% 81.1% 71.1% 21.1%
Mountain View Village Jun-02 220 N/A N/A N/A N/A
North White Road Nov-01 157 N/A N/A N/A N/A
Oak Grove Commons Dec-01 168 23.8% N/A N/A N/A
Olathe Senior Residences Dec-02 144 N/A N/A N/A N/A
Osborne Place Manor Dec-02 50 N/A N/A N/A N/A
Penn Valley Dec-01 42 N/A N/A N/A N/A
Sanger Trails Dec-02 208 N/A N/A N/A N/A
Sycamore Senior Village Jun-02 300 N/A N/A N/A N/A
Village at Sun Valley May-00 276 85.9% 89.1% 60.1% N/A
Walnut Tree Mar-02 64 N/A N/A N/A N/A
Woodland Village May-03 198 N/A N/A N/A N/A
-----------
Subtotal Construction/Rehab Properties 13,945
-----------
Total Units 35,204
===========
Avg. Monthly Rent
Per Apartment Unit
-----------------------------------------------------
Month Month Month Month
Ended Ended Ended Ended
Month/Year Apartment May 31, March 31, June 30, June 30,
Apartment Community Acquired Units 2003 2003 2002 2001
-------------------- ----------- ---------- -----------------------------------------------------
Subordinate Mortgage Bonds:
CAPREIT Sep-99 - N/A N/A N/A N/A
Cinnamon Ridge Jan-99 - N/A N/A N/A N/A
Farmington Meadows Aug-99 69 814 814 814 814
Independence Ridge Aug-96 336 555 554 551 541
Locarno Aug-96 110 898 891 877 851
Olde English Manor Nov-99 - N/A N/A N/A N/A
Peaks of Conyer Sep-01 260 737 737 738 N/A
Rillito Village Jul-00 - N/A N/A N/A N/A
Winter Oaks Nov-99 460 558 557 554 541
-------------
Subtotal Subordinate Mortgage Bonds 1,235
-------------
Other Bond Related Investments:
Briarwood Dec-98 600 639 633 603 584
Cinnamon Ridge Dec-97 264 952 938 917 905
Golfside Villas (f.k.a. Club West) Mar-99 194 618 617 618 571
Park at Landmark Sep-00 396 1,075 1,081 1,066 992
Poplar Glen Jun-97 191 988 974 938 901
RITES - Charter House Dec-96 280 625 625 619 607
RITES - Indian Lakes Jul-97 296 781 790 785 755
RITES - LaPaloma Apr-99 120 652 654 619 609
RITES - LeMirador (Coleman Senior) Apr-98 141 855 835 871 772
RITES - Museum Towers Apr-01 286 1,355 1,342 1,367 1,327
RITES - Olde English Manor Jun-98 264 496 494 479 469
RITES - Palisades Park Feb-98 304 560 555 545 515
RITES - Pavillion Apr-99 132 673 667 675 653
RITES - Queen Anne IV Jul-98 110 1,102 1,108 1,094 1,039
RITES - Rancho/Villas May-00 417 498 476 487 483
RITES - Rillito Village Aug-98 272 469 463 440 453
RITES - Riverset (1) Aug-88 352 710 705 693 695
RITES - Riverset II (1) Jan-96 ---- N/A N/A N/A N/A
RITES - Sienna (a.k.a. Italian Gardens) Apr-98 140 813 811 857 743
RITES - Sonterra May-98 156 869 863 847 864
RITES - Southgate Crossings Jun-97 215 1,005 992 981 912
RITES - Southwood Nov-97 1,286 498 496 492 484
-------------
Subtotal Other Bond Related Investments 6,416
-------------
Total Units/Weighted Average Investments 21,259 686 696 696 659
=============
Total/Same Stores (5) 2001 20,261 689 686 680 659
Total/Same Stores (5) 2002 20,403 705 701 696
Construction/Substantial Rehab Properties and Other Investments
Arlington Dec-00 176 1,389 1,388 N/A N/A
Barrington at Beach Street Oct-00 398 778 803 847 N/A
Bedford Park Oct-00 312 532 530 547 489
CAPREIT Joint Venture (6) Jun-02 6,279 748 751 739 N/A
CAPREIT TERA (7) Mar-01 2,942 606 608 630 N/A
Chancellor Nov-01 101 N/A N/A N/A N/A
Chancellor II Mar-02 46 N/A N/A N/A N/A
City Views at Rosa Burney Park Dec-02 180 560 N/A N/A N/A
Cliffs at Grove Barton Apr-03 132 N/A N/A N/A N/A
Cool Springs Aug-00 124 1,938 1,919 1,947 N/A
Coronel Village Apr-02 48 N/A N/A N/A N/A
Eden Park May-03 104 N/A N/A N/A N/A
Fort Branch Dec-00 250 735 738 830 N/A
Hidden Brooks Sep-01 201 1,050 1,026 1,057 N/A
Jefferson at Town Lake Dec-02 216 N/A N/A N/A N/A
Lake Pleasant Village May-03 152 N/A N/A N/A N/A
Las Trojas Mar-02 49 N/A N/A N/A N/A
Liberty Park Townhomes Feb-03 184 492 490 N/A N/A
Lincoln Corner Dec-01 134 N/A N/A N/A N/A
Meridian at Bridgewater Nov-99 90 N/A N/A 3,496 3,465
Mountain View Village Jun-02 220 N/A N/A N/A N/A
North White Road Nov-01 157 N/A N/A N/A N/A
Oak Grove Commons Dec-01 168 N/A N/A N/A N/A
Olathe Senior Residences Dec-02 144 N/A N/A N/A N/A
Osborne Place Manor Dec-02 50 N/A N/A N/A N/A
Penn Valley Dec-01 42 N/A N/A N/A N/A
Sanger Trails Dec-02 208 N/A N/A N/A N/A
Sycamore Senior Village Jun-02 300 N/A N/A N/A N/A
Village at Sun Valley May-00 276 684 684 681 N/A
Walnut Tree Mar-02 64 N/A N/A N/A N/A
Woodland Village May-03 198 N/A N/A N/A N/A
-------------
Subtotal Construction/Rehab Properties 13,945
-------------
Total Units 35,204
=============
(1) The Company owns a participating bond, a participating subordinate bond and
a RITES interest collateralized by the Riverset property.
(2) The Company owns a non-participating bond and a RITES interest
collateralized by the Charter House property.
(3) The Dade Gannon Portfolio represents three properties. (4) The Oklahoma City
Portfolio represents three properties. (5) Same Store includes only
properties reporting for all three quarters.
(6) CAPREIT Joint Venture represents twenty properties (not included previously
in CAPREIT Portfolio).
(7) The CAPREIT TERA Portfolio represents eleven properties.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONFERENCE CALL SCRIPT - COMBINED TAX CREDIT EQUITY BUSINESS
FOR THE YEAR ENDED DECEMBER 31, 2003
* OVERALL ACCRETION/DILUTION FOR 2003:
* For CAD purposes, the acquisition of the HCI business is expected to
generate an additional three to five (5) cents per common share for
the remainder of 2003. For 2004, we think the acquisition will
generate twice as much accretion as the high end of the range for
second half of 2003.
* In the past we have not provided any guidance for GAAP earnings.
However, under the new rules effective the end of Q1, we are now
required to reconcile any non-GAAP measurements to GAAP. At this time,
we anticipate that the acquisition will be 15 to 20 cents per share
dilutive to basic earnings per share. After reviewing the main
business components of the acquisition, we will review in more detail
the differences between CAD and GAAP.
* Lumpiness - with the addition of the fee generating business, we're
confident that the earnings are available to us. However, we will
probably see more variability in quarterly earnings. We're
anticipating stronger second and fourth quarters and weaker first and
third quarters on a relative basis.
* Continue to believe the tax-exempt percentage will be in the mid
80's but is still subject to further review and refinement of
financing options.
* REVENUES: We now will walk through how we primarily earn money in the tax
credit equity business. There are two main parts:
* Syndication Fees; in addition some portion of this business is based
on a guarantee format, therefore, guarantee fee revenue * Asset
Management Fees, which are like servicing fees
Production:
* Combined syndication equity raise for fiscal year 2003 is
anticipated to be $425M to $450M * Our previous estimates for MEC
total syndication equity raise was $200M to $250M * Increase in
production almost doubles previous outlook * Reflecting the
integration of our equity syndication business, we will no longer
distinguish between MEC and HCI; all forecasted production reflects
integrated business. * Overall production goal: HCI production goals
are considered additive to legacy MEC production goals because of
minimal overlap in developer clients and minimal overlap in investors.
* Overall fund syndication fees percentage expected to be about 4%, up
slightly from legacy MEC.
Other Revenues:
* As a result of combined business, total tax credit equity fund
assets are expected to grow to approximately $4 billion from $685
million by year-end 2003, earning 30 to 35 bps in asset management
fees.
* Other miscellaneous revenues associated with the new combined
business include guarantee fee premiums (approximately $1M for second
half of 2003), revenues associated with investment valuation services
performed by HCI personnel, and other miscellaneous revenues
approximating $3.6M for the second half of 2003.
* EXPENSES:
* Operating expenses - total operating expenses associated with the
addition of the HCI business are expected to run about $14M for the
second half of 2003. [This includes incentive bonuses for all
production personnel and staff of approximately $3.5M.] * Interest
expense associated with warehousing and bridging not absorbed by the
funds is expected to go up due to an increase in property acquisition
production and timing of placement activity.
* FINANCING ASSUMPTIONS (subject to further review and refinement and future
market conditions) associated with financing the acquisition are as follows:
* RBC Line of Credit for $120M to cover purchase price, costs
associated with the acquisition and initial working capital needs *
$120M at Libor plus 290 bps beginning 7/1/03 * $75M of Line is taken
out with taxable trust preferred equity at 8.75% for total raise of
$77.4M in fourth quarter * Remaining $45M taken out in early 2004 with
common equity
* PRIMARY CAD TO GAAP DIFFERENCES:
* For GAAP purposes, the net assets of all guaranteed funds will be
consolidated into the balance sheet of MMA. As a result, all guarantee
fee premiums associated with these funds will not be reflected in the
net income of MMA. These premiums will be booked for CAD. * Asset
management fees receivable associated with the acquisition will not be
reflected in the GAAP net income of MMA. In addition, any asset
management fees collected on guaranteed funds will not be recognized
for GAAP purposes due to the consolidation of these funds discussed
above. For CAD purposes, asset management fees will be recognized to
the extent of cash received. For 2003, approximately 1/2 of the total
fees collected for CAD relate to the purchased receivable.
* The amortization of the capitalized portion of the acquired asset
management contracts will be reflected in GAAP net income of MMA. This
non-cash charge does not affect CAD or the cash flow generated from
the operations of the business.
* NOTE: There are several other identified differences between GAAP
and CAD. However, at this time, these differences are expected to be
immaterial. As a result, the impacts of these differences have not
been reflected in the forecasted numbers discussed above. Further note
is that the audits of the HCI unit in accordance with US GAAP have not
been completed as of today. They will be completed and filed in
September 2003 along with the Form 8K. As a result, there may be other
CAD and GAAP adjustments in addition to the ones previously discussed.
SIGNATURES
Pursuant to the requirements 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.
MUNICIPAL MORTGAGE & EQUITY, LLC
Date: August 13, 2003 By: /s/ William S. Harrison
-------------------------------------
Name: William S. Harrison
Title: SVP and Chief Financial Officer
Exhibit 99.2
------------
INFORMATION FOR RELEASE
MuniMae Reports 2003 Second Quarter Results
26th Consecutive Increase in Distribution to Common Shares
BALTIMORE (July 17, 2003) - Municipal Mortgage & Equity, LLC (NYSE: MMA), known
as MuniMae, reported net income allocated to common shares of $30.6 million for
the quarter ended June 30, 2003, compared to $2.9 million for the same period in
2002. Diluted earnings per share were $1.05 for the quarter, compared to $0.11
for the same period in 2002.
Cash Available for Distribution ("CAD"), the primary measure of the Company's
distribution paying ability, increased 18% for the quarter ended June 30, 2003
compared to the same period in 2002. CAD per common share increased 6% compared
to the same period in 2002. The Board of Directors raised the quarterly
distribution to common shares to $0.4475, an increase of 2% over the same period
in 2002.
Mark K. Joseph, Chairman of the Board and CEO of MuniMae, commented, "We are
pleased to announce the 26th consecutive increase to our dividend. We are
pleased with our second quarter performance as well. MuniMae continues to
diversify its product base, and as announced previously, has purchased the
Housing and Community Investing (HCI) unit of Lend Lease Real Estate
Investments, formerly known as Boston Financial Group. HCI is a market leader in
the syndication of low-income housing tax credits and we expect their strong
franchise to contribute meaningfully to our continuing efforts to increase our
cash available for distribution, or CAD, and shareholder value."
Mr. Joseph added, "During the second quarter, the Company also experienced a
significant increase in GAAP earnings due to the sale of a bond. For CAD, a
large portion of the income generated by the sale of the bond was offset by the
Company's sale of certain interest rate swaps. However, because of a previous
GAAP write-off of a portion of this bond, the GAAP net income resulting from
these two transactions was significantly greater than the CAD net income."
Summary Results - GAAP
----------------------
The table below summarizes the Company's results for the second quarter of 2003
and the prior-year period:
Second Quarter
-------------------------------------
2003 2002 Change
Net Income to Common Shares from Continuing
Operations ($ millions) $4.8 $2.9 66%
Per Share Results from Continuing Operations
Basic ($) $0.17 $0.12 42%
Diluted ($) $0.16 $0.11 45%
Net Income to Common Shares ($ millions) $30.6 $2.9 NM
Per Share Results
Basic ($) $1.06 $0.12 NM
Diluted ($) $1.05 $0.11 NM
The attached condensed consolidated statements of income represent the GAAP
results of operations of the Company for the three- and six-month periods ended
June 30, 2003 and 2002.
Summary Results - CAD
---------------------
For the second quarter of 2003, CAD was $18.1 million and CAD to common shares
was $15.1 million. The 2003 second quarter per share distribution to common
shareholders of $0.4475 represents a payout ratio of 85%. (The Company uses CAD
as the primary performance measure and believes it to be illustrative for its
distribution-paying ability. CAD differs from net income because of variations
between GAAP income and actual cash received. These variations are described in
the note to the attached calculation of CAD statement.)
Second Quarter
------------------------------------------------
2003 2002 Change
Total CAD ($ millions) $18.1 $15.4 18%
CAD to Common ($ millions) $15.1 $12.4 22%
CAD per Common Share ($) $0.52 $0.49 6%
A reconciliation of GAAP net income to CAD to common shares is attached.
Second Quarter Distribution
---------------------------
MuniMae's second quarter distribution to common shareholders of $0.4475
annualizes to $1.79 per share. Based on yesterday's closing share price of
$25.63, MuniMae common shares have an annualized yield to shareholders of 7%.
Based on the assumption that the Company's income is 85% exempt from Federal
income tax, absent the impact of capital gains and assuming a 35% tax bracket,
the taxable equivalent yield would be 10.2%. The record date for the quarterly
distribution is July 28, and the payment date is August 8.
About Municipal Mortgage & Equity
---------------------------------
MuniMae and its subsidiaries originate, service and asset manage investments in
multifamily debt and equity for its own account and on behalf of others. As of
June 30, 2003, assets under management totaled $3.7 billion secured by 933
properties containing 96,168 units in 48 states and the U.S. Virgin Islands. As
of July 1, 2003, at the completion of the HCI acquisition, assets under
management totaled $7.5 billion representing approximately 2,044 properties
containing 218,144 units. For its proprietary accounts, MuniMae primarily holds
tax-exempt multifamily housing bonds. This on-balance sheet portfolio of
tax-exempt bonds is secured by 148 properties containing 35,204 units in 28
states. For a portion of these bonds, MuniMae participates in the performance of
the underlying properties.
MuniMae is organized as a limited liability company. This structure allows
MuniMae to combine the limited liability, governance and management
characteristics of a corporation with the pass-through income features of a
partnership. As a result, the tax-exempt income derived from certain investments
remains tax-exempt when passed through to shareholders. Distributions to
shareholders are declared quarterly and paid in February, May, August and
November.
The calculation of Cash Available for Distribution is the basis for the
determination of the Company's quarterly distributions to common shares, is used
by securities analysts, and is presented as a supplemental measure of the
Company's performance. The calculation is not approved by the Securities and
Exchange Commission nor is it required by GAAP and should not be considered as
an alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flows as a measure of liquidity. The
Company believes that Cash Available for Distribution provides relevant
information about its operations and is necessary, along with net income, for
understanding its operating results.
This press release contains statements which are forward looking in nature and
reflect management's current views with respect to future events and financial
performance. These statements are subject to many uncertainties and risks and
should not be considered guarantees of future performance. This press release
does not constitute an offer to sell any securities of Municipal Mortgage &
Equity, LLC.
Actual results may vary materially from projected results based on a number of
factors, including the actual performance of the properties pledged as
collateral for the portfolio, general conditions in the local real estate
markets in which the properties are located and prevailing interest rates.
MUNIMAE: TAX-EXEMPT DISTRIBUTIONS AND GROWTH THROUGH REAL ESTATE
www.munimaemidland.com / www.mmafin.com
Contacts
Investor Relations:
Angela Richardson, 888/788-3863
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
For the three months ended For the six months ended
June 30, June 30,
----------------------------- -----------------------------
2003 2002 2003 2002
------------- -------------- ------------- --------------
INCOME:
Interest income
Interest on bonds and residual interests in bond securitizations $ 13,929 $ 15,399 $ 29,914 $ 30,561
Interest on loans 7,563 8,594 17,066 17,024
Interest on short-term investments 332 244 524 731
------------- -------------- ------------- --------------
Total interest income 21,824 24,237 47,504 48,316
------------- -------------- ------------- --------------
Fee income
Syndication fees 1,825 2,380 3,236 3,998
Origination fees 2,219 1,505 2,917 2,594
Loan servicing fees 1,838 1,660 3,747 3,568
Asset management and advisory fees 1,198 1,040 2,274 1,907
Other income 3,309 1,259 5,506 2,404
------------- -------------- ------------- --------------
Total fee income 10,389 7,844 17,680 14,471
------------- -------------- ------------- --------------
Net gain on sales 1,453 703 2,731 2,869
------------- -------------- ------------- --------------
Total income 33,666 32,784 67,915 65,656
------------- -------------- ------------- --------------
EXPENSES:
Interest expense 8,724 8,487 19,092 17,459
Salaries and benefits 8,671 5,930 14,637 10,757
General and administrative 2,113 1,697 3,938 3,423
Professional fees 877 1,967 1,866 2,604
Amortization of mortgage servicing rights and other intangibles 414 333 803 651
------------- -------------- ------------- --------------
Total expenses 20,799 18,414 40,336 34,894
------------- -------------- ------------- --------------
Net holding gains (losses) on derivatives (2,449) (7,721) 424 (4,609)
Impairments and valuation allowances related to investments (1,144) - (1,144) (110)
Net gains (losses) from equity investments in partnerships (2,157) 94 (2,904) (229)
Income tax benefit (expense) 540 (828) 472 (1,859)
Income allocable to preferred shareholders and minority interests in
subsidiary companies (2,854) (2,995) (5,679) (5,989)
------------- -------------- ------------- --------------
Net income from continuing operations 4,803 2,920 18,748 17,966
Discontinued operations 25,748 - 25,748 -
------------- -------------- ------------- --------------
Net Income $ 30,551 $ 2,920 $ 44,496 $ 17,966
============= ============== ============= ==============
LESS:
Net income allocable to term growth shares - - - 153
------------- -------------- ------------- --------------
Net income allocated to common shares $ 30,551 $ 2,920 $ 44,496 $ 17,813
============= ============== ============= ==============
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Net income from continuing operations $ 0.17 $ 0.12 $ 0.67 $ 0.73
Discontinued operations 0.89 - 0.91 -
------------- -------------- ------------- --------------
Basic earnings per common share $ 1.06 $ 0.12 $ 1.58 $ 0.73
============= ============== ============= ==============
Weighted average common shares outstanding 28,857,305 25,252,124 28,104,281 24,423,091
Diluted earnings per common share:
Net income from continuing operations $ 0.16 $ 0.11 $ 0.66 $ 0.71
Discontinued operations 0.89 - 0.90 -
------------- -------------- ------------- --------------
Diluted earnings per common share $ 1.05 $ 0.11 $ 1.56 $ 0.71
============= ============== ============= ==============
Weighted average common shares outstanding 29,213,062 25,835,808 28,451,480 25,022,631
MUNICIPAL MORTGAGE & EQUITY, LLC
RECONCILIATION OF GAAP INCOME TO CASH AVAILABLE FOR DISTRIBUTION
(In thousands)
(unaudited)
For the three months ended For the six months ended
June 30, June 30,
---------------------------- ----------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
INCOME:
Interest income
Interest on bonds and residual interests in bond
securitizations $ 13,929 $ 15,399 $ 29,914 $ 30,561
Interest on loans 7,563 8,594 17,066 17,024
Interest on short-term investments 332 244 524 731
------------- ------------- ------------- -------------
Total interest income 21,824 24,237 47,504 48,316
------------- ------------- ------------- -------------
Fee income
Syndication fees 1,825 2,380 3,236 3,998
Origination fees 2,219 1,505 2,917 2,594
Loan servicing fees 1,838 1,660 3,747 3,568
Asset management and advisory fees 1,198 1,040 2,274 1,907
Other income 3,309 1,259 5,506 2,404
------------- ------------- ------------- -------------
Total fee income 10,389 7,844 17,680 14,471
------------- ------------- ------------- -------------
Net gain on sales 1,453 703 2,731 2,869
------------- ------------- ------------- -------------
Total income 33,666 32,784 67,915 65,656
------------- ------------- ------------- -------------
EXPENSES:
Interest expense 8,724 8,487 19,092 17,459
Salaries and benefits 8,671 5,930 14,637 10,757
General and administrative 2,113 1,697 3,938 3,423
Professional fees 877 1,967 1,866 2,604
Amortization of mortgage servicing rights and other intangibles 414 333 803 651
------------- ------------- ------------- -------------
Total expenses 20,799 18,414 40,336 34,894
------------- ------------- ------------- -------------
Net holding gains (losses) on derivatives (2,449) (7,721) 424 (4,609)
Impairments and valuation allowances related to investments (1,144) - (1,144) (110)
Net gains (losses) from equity investments in partnerships (2,157) 94 (2,904) (229)
Income tax benefit (expense) 540 (828) 472 (1,859)
Income allocable to preferred shareholders and minority interests
in subsidiary companies (2,854) (2,995) (5,679) (5,989)
------------- ------------- ------------- -------------
Net income from continuing operations 4,803 2,920 18,748 17,966
Discontinued operations 25,748 - 25,748 -
------------- ------------- ------------- -------------
Net income $ 30,551 $ 2,920 $ 44,496 $ 17,966
============= ============= ============= =============
LESS:
Net income allocable to term growth shares - - - 153
------------- ------------- ------------- -------------
Net income allocated to common shares - GAAP Basis $ 30,551 $ 2,920 $ 44,496 $ 17,813
============= ============= ============= =============
Conversion to Cash Available for Distribution:
(1)Mark to market adjustments $ 2,449 $ 7,721 $ (424) $ 4,609
(2)Equity investments 3,732 79 6,142 519
(3)Net gain on sales (10,486) (601) (10,813) (2,727)
(3)Amortization of capitalized mortgage servicing fees 414 333 766 651
(4)Origination fees and other income, net 1,335 1,450 1,616 2,123
(5)Valuation allowances and other-than-temporary impairments 1,097 - 1,097 110
(6)Deferred tax expense 984 483 1,612 1,100
(7)Discontinued operations (25,748) - (25,748) -
(7)Interest income 10,793 - 10,793 -
------------- ------------- ------------- -------------
Cash Available for Distribution (CAD) $ 15,121 $ 12,385 $ 29,537 $ 24,198
============= ============= ============= =============
Notes
-----
(1) For GAAP reporting, the Company records the non-cash change in fair value of
its investment in interest rate swaps and other derivative financial instruments
through net income. These non-cash gains and losses are not included in the
Company's calculation of CAD.
(2) For GAAP reporting, the Company accounts for various investments in
partnerships using the equity accounting method. As a result, the Company's
allocable share of the income or loss from the partnerships is reported in
income (losses) from equity investments in partnerships. The income from these
partnerships includes depreciation expense and changes in the fair value of
investments in derivatives. For GAAP reporting, distributions are treated as a
return of capital. For CAD reporting, the Company records the cash distributions
it receives from the partnerships as other income. In addition, a portion of the
income or loss from partnerships is reduced by a minority interest for both GAAP
and CAD.
(3) For GAAP reporting, the Company recognizes non-cash gains and losses
associated with the sale of assets or capitalization of mortgage servicing
rights. The capitalized mortgage servicing rights are amortized into expense
over the estimated life of the serviced loans. The non-cash gains and the
associated amortization expense are not included in CAD.
(4) Origination fees and certain other income amounts are recognized as income
when received for CAD purposes, but for GAAP reporting these items are deferred
and amortized into income over the life of the associated investment. This
adjustment represents the net difference, for the relevant period, between fees
taken into income when received for CAD and the amortization of fees recorded
for GAAP.
(5) For GAAP reporting, the Company records valuation allowances and
other-than-temporary impairments on its investments in loans, bonds and other
bond-related investments. Such non-cash charges do not affect the cash flow
generated from the operation of the underlying properties, distributions to
shareholders, or the tax-exempt status of the income of the financial obligation
under the bonds. Therefore, these items are not included in the calculation of
CAD.
(6) For GAAP reporting, the Company's income tax expense contains both a current
and a deferred component. Only the Company's current income tax expense is
reflected in CAD.
(7) For GAAP reporting, the Company recognized a gain upon the sale of a
property. This gain was required to be classified as discontinued operations
because the Company owned the property prior to the sale. For CAD reporting, the
gain was significantly less due to recording a portion of the proceeds as
interest income. In addition, the carrying value of the tax-exempt bond
associated with the property was significantly more for CAD due to an impairment
previously recognized for GAAP.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(Unaudited)
(In thousands, except share and per share data)
For the three months ended For the six months ended
June 30, June 30,
---------------------------- ---------------------------
2003 2002 2003 2002
------------ -------------- ------------- ------------
SOURCES OF CASH:
Interest on bonds, residual interests in bond securitizations and loans $ 31,597 $ 23,377 $ 56,445 $ 46,340
Interest on short-term investments 332 244 524 731
Syndication fees 1,825 2,380 3,236 3,998
Origination fees 2,711 3,005 3,871 4,513
Loan servicing fees 1,835 1,660 3,744 3,568
Asset management and advisory fees 1,198 1,040 2,274 1,907
Distributions from equity investments in partnerships 1,716 173 3,547 290
Other income 4,221 1,238 6,312 2,584
Net gain (loss) on sales (9,033) 102 (8,082) 142
------------ -------------- ------------- ------------
TOTAL SOURCES OF CASH 36,402 33,219 71,871 64,073
------------ -------------- ------------- ------------
EXPENSES:
Interest expense 8,102 7,900 17,941 16,190
Salaries and benefits 8,671 5,930 14,637 10,757
Professional fees 877 1,967 1,866 2,604
General and administrative 2,113 1,697 3,938 3,423
Loan loss expense 47 - 47 -
Income tax expense (benefit) (1,524) 345 (2,084) 759
------------ -------------- ------------- ------------
TOTAL EXPENSES 18,286 17,839 36,345 33,733
------------ -------------- ------------- ------------
CASH AVAILABLE FOR DISTRIBUTION 18,116 15,380 35,526 30,340
------------ -------------- ------------- ------------
LESS:
Cash allocable to preferred shareholders and term growth shares,
including preferred shareholders in a subsidiary company 2,995 2,995 5,989 6,142
------------ -------------- ------------- ------------
CASH AVAILABLE FOR DISTRIBUTION TO COMMON SHARES $ 15,121 $ 12,385 $ 29,537 $ 24,198
============ ============== ============= ============
CAD PER COMMON SHARE $ 0.52 $ 0.49 $ 1.02 $ 0.96
============ ============== ============= ============
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 15,121 $ 12,385 $ 29,537 $ 24,198
============ ============== ============= ============
ACTUAL AMOUNT PAID $ 12,903 $ 11,072 $ 25,740 $ 22,040
============ ============== ============= ============
PAYOUT RATIO 85.3% 89.4% 87.3% 91.1%
============ ============== ============= ============
COMMON SHARES OUTSTANDING 28,832,443 25,308,022
============ ==============
CASH DISTRIBUTION PER COMMON SHARE $ 0.4475 $ 0.4375 $ 0.8925 $ 0.8725
============ ============== ============= ============
The primary differences between Net Income as calculated under generally
accepted accounting principles ("GAAP") and Cash Available For Distribution
("CAD") result from the timing of income and expense recognition and non-cash
events. These differences between CAD and GAAP income include the treatment of
loan origination fees, which for CAD purposes are recognized when received but
for GAAP purposes are amortized over the life of the associated loan. In
addition, there are differences related to non-cash gains and losses associated
with bond valuations and sales, non-cash gains and losses associated with
changes in market value of derivative financial instruments, amortization of
goodwill and intangibles and capitalization of mortgage servicing rights, net of
deferred taxes for GAAP purposes, which are not included in the calculation of
CAD.
The common shares outstanding reported for Cash Available for Distribution
are the actual shares outstanding at the end of the quarter. For GAAP, the
weighted average shares outstanding during the period are reported for the basic
net income per share calculation. The weighted average shares outstanding for
diluted net income per share include the potential dilutive effect from the
exercise of options, vesting of restricted shares, conversion of the preferred
shares and provision for shares to be awarded under the Midland acquisition earn
out provision.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
June 30, December 31,
2003 2002
---------------- ---------------
ASSETS:
Investment in tax-exempt bonds and residual interests
in bond securitizations $ 788,892 $ 781,384
Loans receivable, net 451,397 422,299
Loans receivable held for sale 11,023 39,149
Investments in partnerships 97,688 99,966
Investment in derivative financial instruments 3,170 18,762
Cash, cash equivalents and interest receivable 98,587 59,902
Other assets 115,798 97,919
Goodwill 33,607 33,537
---------------- ---------------
TOTAL $ 1,600,162 $ 1,552,918
================ ===============
LIABILITIES AND EQUITY:
Notes payable $ 436,949 $ 450,924
Short-term debt 211,670 219,945
Long-term debt 142,006 147,357
Residual interests in bond securitizations 1,343 1,447
Investment in derivative financial instruments 21,792 49,359
Other liabilities 48,150 36,370
Preferred shareholders' and minority interests' equity in subsidiary companies 160,142 160,452
Shareholders' equity 578,110 487,064
---------------- ---------------
TOTAL $ 1,600,162 $ 1,552,918
================ ===============
Exhibit 99.3
------------
INFORMATION FOR RELEASE
MuniMae Structures $399 Million of Multifamily Financing
And Raises $38 Million in Capital During Second Quarter
BALTIMORE (July 17, 2003) -- Municipal Mortgage & Equity, LLC (NYSE: MMA) known
as MuniMae, announced today that it structured $399 million of financing for
multifamily housing during the second quarter of 2003. In addition, the Company
raised $38 million in tax credit equity.
Mark K. Joseph, Chairman of the Board and CEO of MuniMae, commented, "We are
very pleased with the second quarter production activity. As is usually the
case, our production volumes tend to increase as the year goes on because of
cyclical issues unique to affordable housing. With the recent purchase of HCI, a
market leader in syndication of low income housing tax credit equity
investments, and our existing pipeline showing healthy growth, we expect that
our production will be stronger for the second half of the year. We look forward
to the opportunity of servicing our clients as a one stop financing source."
Investment Activity Summary
---------------------------
Highlights of second quarter and year-to-date origination activity include:
Second Quarter Year-to-Date
Volume (in millions) Volume (in millions)
Taxable Construction/Permanent Lending $212.4 $288.2
Tax-exempt Bonds Construction/Permanent 65.7 97.8
Supplemental Loans 7.7 24.5
Equity Investments 112.8 141.9
Total $398.6 $552.4
Capital Activity Summary
------------------------
In the second quarter of 2003, the Company raised $38.7 million of tax credit
equity from five third-party investors, bringing the year-to-date total to $74.0
million in equity raised.
About Municipal Mortgage & Equity
---------------------------------
MuniMae and its subsidiaries originate, service and asset manage investments in
multifamily debt and equity for its own account and on behalf of others. As of
June 30, 2003, assets under management totaled $3.7 billion secured by 933
properties containing 96,168 units in 48 states and the U.S. Virgin Islands. As
of July 1, 2003, at the completion of the HCI acquisition, assets under
management totaled $7.5 billion representing approximately 2,044 properties
containing 218,144 units. For its proprietary accounts, MuniMae primarily holds
tax-exempt multifamily housing bonds. This on-balance sheet portfolio of
tax-exempt bonds is secured by 148 properties containing 35,204 units in 28
states. For a portion of these bonds, MuniMae participates in the performance of
the underlying properties.
MuniMae is organized as a limited liability company, which makes it exempt from
tax at the corporate level and provides the benefit of corporate governance. In
addition, the Company passes through to its shareholders primarily tax-exempt
dividends, which are generated by its municipal bond investments. Dividends to
shareholders are declared quarterly and paid in February, May, August and
November.
This press release contains statements which are forward looking in nature and
reflect management's current views with respect to future events and financial
performance. These statements are subject to many uncertainties and risks and
should not be considered guarantees of future performance. Actual results may
vary materially from projected results based on a number of factors, including
the actual performance of the properties pledged as collateral for the
portfolio, general conditions in the local real estate markets in which the
properties are located and prevailing interest rates.
MUNIMAE: TAX-EXEMPT DISTRIBUTIONS AND GROWTH THROUGH REAL ESTATE
www.munimaemidland.com / www.mmafin.com
Contacts
Investor Relations
Angela Richardson, 888/788-3863