NEWPORT BEACH, Calif., April 20, 2005 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period January 1, 2005 through March 31, 2005 (first quarter).
PIMCO Commercial Mortgage Securities Trust, Inc. ("PCM" or the "Fund") is a closed-end bond fund that invests principally in commercial mortgage-backed securities ("CMBS"). The primary investment objective of the Fund is to achieve high current income, with capital gain from the disposition of investments as a secondary objective. Pacific Investment Management Company LLC ("PIMCO"), an investment adviser with $464 billion of assets under management as of March 31, 2005, is responsible for managing the Fund's investment portfolio.
Investment Performance, Price and Dividend Information
The Fund's valuation and investment performance information are as follows:
Performance for the periods ended 3/31/05
3 6 1 3 5 10
Mos Mos Year Years(a) Years(a) Years(a)
PCM Based on Net
Asset Value (%) 0.25 2.45 4.70 8.85 9.35 9.16
PCM Based on NYSE
Share Price (%) 3.82 -1.16 -0.94 7.65 11.41 10.96
Lehman Aggregate
Index (%) -0.48 0.47 1.15 5.99 7.14 7.14
(a) Annualized
The Fund's total return investment performance is net of all fees and expenses and assumes the reinvestment of dividends.
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Price Information
Pricing Date NYSE Share Price Net Asset Value
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3/31/2005 $13.40 $12.24
12/31/2004 $13.17 $12.49
3/31/2004 $14.70 $12.80
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Date Premium/(Discount) to Net Asset Value
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3/31/2005 9.48%
12/31/2004 5.44%
3/31/2004 14.84%
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Dividend Information
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Regular monthly dividend per share: $0.09375
Total dividends declared in the quarter: $0.28125
Annualized dividend yield at 3/31/2005 based
on NYSE share price: 8.40%
Annualized dividend yield at 3/31/2005 based
on net asset value: 9.19%
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Portfolio Statistics
The Fund's investment portfolio had the following characteristics
as of March 31, 2005:
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Net Assets: $137.6 million
Average Duration: 4.5 years
Average Maturity: 3.8 years
Quality Ratings: 1% AAA, 9% AA, 20% A, 36% BAA, 26% BA,
4% B, 4% less than B
Average Quality: BA+
Sector Weightings: 49.4% Multi-Class (a mix of all
commercial property types, including
office buildings and industrial
properties), 22.8% Multi-Family
(apartment buildings), 11.0% Real Estate
ABS, 7.7% Hospitality (hotels and
motels), 4.5% Commercial Paper, 2.5%
Healthcare (hospitals and nursing care
facilities), 0.0% Corporate, 2.1% Other.
% Leverage (3/31/05): 32.6% (The Fund's use of leverage is
subject to change at any time.)
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Fund Commentary
During the first quarter, the Fund's portfolio of commercial mortgage-backed securities returned 0.25% based on the Fund's net asset value and 3.82% based on its NYSE share price. In comparison, the Lehman Brothers Aggregate Bond Index (which includes Treasury, investment-grade corporate, and residential mortgage-backed securities) returned -0.48% during the quarter. The Fund maintained an uninterrupted and constant dividend throughout the first quarter, holding the monthly per share rate steady at $0.09375. These dividend payouts equate to an annualized dividend yield of 8.40% based on the Fund's March 31, 2005 NYSE share price.
The Fund's continued strong performance relative to the benchmark was helped by an allocation to seasoned manufactured housing bonds and the Fund's overweight to health care and hotel CMBS. In particular, the hotel sector showed significant signs of improvement and has been one of the better performing real estate sectors so far in 2005. The Fund also had significant price appreciation on certain previously underperforming bonds, as the workout strategies for these bonds came to a conclusion.
Market Commentary
Most bond sectors lost ground during the first quarter. The Lehman Brothers Aggregate Bond Index returned -0.48%, weighed down by rising short and intermediate maturity interest rates and credit concerns sparked by earnings warnings in the auto sector. The benchmark 10-year Treasury yield closed the quarter at 4.48%, which was 0.26% higher than at the end of 2004.
Interest rates were volatile despite their overall upward movement. During the first half of the quarter, yields on longer maturities fell even as the Federal Reserve was pushing up short rates, an unusual occurrence dubbed a "conundrum" by Fed Chairman Alan Greenspan. The 10-year Treasury yield dropped below 4% during the quarter amid strong demand from Asian central banks and speculation that U.S. pension funds would eventually increase purchases of longer dated bonds.
This prediction was based on proposed regulatory changes in the U.S. that would force a closer match between the duration of pension fund assets and their liabilities. Similar pension reform is well advanced in Europe. As short and long rates headed in opposite directions during the quarter, the U.S. yield curve continued to flatten. The difference between two-year and 10-year Treasury yields narrowed from 1.15% at year-end 2004, to only 0.70% at the end of the quarter.
During the second half of the quarter, longer maturity rates reversed course. One spark for this reversal was Greenspan's "conundrum" remark, which cooled speculation in longer maturities. Another spark was investor concern about inflation. Even though measures of inflation excluding energy and food remained relatively tame, the Fed still noted inflation pressure when it announced late in the quarter a 0.25% increase in its federal funds rate target to 2.75%. Oil prices surged toward $60 a barrel during the quarter and other commodity prices climbed sharply as well. A Fed survey found that companies' abilities to pass on these cost increases were growing, though thus far with only limited effect on consumer prices.
For further information, please contact Erik Velicer, PIMCO Commercial Mortgage Securities Trust, Inc., at (949) 720-4733.
Past performance is no guarantee of future results. Investment return, dividend rate, and share price will fluctuate so that shares, when sold, may be worth more or less than their original cost.