NEWPORT BEACH, Calif., April 28, 2000 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period January 1, 2000, through March 31, 2000 (first quarter).
PIMCO Commercial Mortgage Securities Trust, Inc. (the "Fund") is a closed-end bond fund which invests principally in investment grade 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 ("PIMCO"), an investment adviser with more than $193 billion of assets under management as of March 31, 2000, 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:
Total Return Investment Performance
Periods Ended Based on Based on
03/31/00 NYSE Share Price Net Asset Value
-------- ---------------- ---------------
First quarter 5.56% 1.58 %
One year 3.51% 2.85%
Three years (annualized) 7.57% 7.25%
Five years (annualized) 10.50% 8.97%
The Fund's total return investment performance is net of all fees and expenses and assumes the reinvestment of dividends. For comparison purposes, the Lehman Brothers Aggregate Bond Index, a broad market measure of domestic fixed income performance, rose 2.21%, 1.87%, 6.70% and 7.14% for the three months, one year, three years and five years ended March 31, 2000, respectively (3 and 5 year numbers are annualized).
Price Information
Pricing Date NYSE Share Price Net Asset Value
------------ ---------------- ---------------
March 31, 2000 $12.3750 $12.81
December 31, 1999 $12.0000 $12.89
March 31, 1999 $13.1250 $13.62
Premium/(Discount) to Net Asset Value
-------------------------------------
March 31, 2000 (3.40)%
December 31, 1999 (6.90)%
March 31, 1999 (3.63)%
Dividend Information
--------------------
Regular monthly dividend per share: $ 0.09375
Total dividends declared in the quarter: $ 0.28125
Annualized dividend yield at 03/31/00
based on NYSE share price: 9.09%
Annualized dividend yield at 03/31/00
based on net asset value: 8.78%
Portfolio Statistics
The Fund's investment portfolio had the following characteristics
as of March 31, 2000:
Net Assets: $141.1mm
Average Duration: 4.67 years
Average Maturity: 6.84 years
Quality Ratings: 15.2% AAA, 11.5% AA, 9.6% A,
33.6% BBB, 21.7% BB, 8.4% B
Average Quality: BAA
Sector Weightings: 24% Multi-family (apartment buildings),
17% Healthcare (hospitals and nursing
care facilities), 9% Hospitality
(hotels and motels), 1% Retail
(shopping centers), 37% Multi-class (a
mix of all commercial property types,
including office buildings and
industrial properties), 1% Commercial
Paper, 11% Other
Market Commentary
The short and long ends of the Treasury market diverged during the first quarter of 2000. Short-term Treasury yields rose in anticipation of more tightening by the Federal Reserve, with the 3-month Treasury yield increasing 0.57% to end the quarter at 5.89%. In marked contrast, the 30-year Treasury yield fell 0.64%, closing the first quarter at 5.84%, as investors grew concerned that the U.S. government's debt buyback would create a scarcity of long-term Treasuries. An inverted yield curve resulted, with 30-year Treasuries offering no yield advantage over their 3-month counterparts.
The market correctly anticipated the Fed's intentions, as the central bank raised the federal funds rate twice in 0.25% increments during the quarter in its continuing effort to temper the high-flying U.S. economy and combat the prospect of rising inflation. In a press release accompanying the most recent action, the Fed suggested that more rate hikes are in the offing because "increases in demand will continue to exceed the growth in potential supply, which could foster inflationary imbalances that would undermine the record economic expansion."
Those "imbalances" include the record U.S. trade deficit, high corporate and individual debt levels and tight labor markets. Strong equity and housing markets also represent a potential threat because they create a wealth effect that fuels consumer demand. Still, actual inflation remained relatively subdued during the period. While effects of increased energy prices showed up in higher headline consumer price inflation, the core rate, outside of energy and food costs, was little changed.
Treasuries generally outperformed other fixed income sectors during the first quarter. Yields on mortgages and corporate bonds did not fall in line with long-term Treasuries, which caused yield premiums on non-Treasury bonds to widen. Falling 10- and 30-year Treasury yields and concern about credit deterioration in the midst of Fed tightening lured investors away from other bond market sectors.
In this environment of continued Fed tightening, the Fund's portfolio of CMBS posted a 1.58% return for the first quarter based on net asset value and a favorable 5.56% return based on its NYSE share price. The Fund's NYSE share price return bested the 2.21% return of the Lehman Brothers Aggregate Bond Index (which includes Treasury, investment-grade corporate and residential mortgage-backed securities) over the three-month period. Share price performance was significantly boosted as the Fund's trading discount to its net asset value narrowed over the quarter from -6.90% to -3.40%. Longer term performance continues to be strong with the Fund posting an annualized return based on NYSE share price of 7.57% for the three-year period and 10.50% over the five-year period ended March 31, 2000, outperforming the Index returns of 6.70% and 7.14% over the same periods, respectively. The Fund maintained an uninterrupted and constant dividend throughout the quarter, holding the monthly per share rate steady at $0.09375. These dividend payouts equate to an annualized dividend yield of 9.09% based on the Fund's NYSE trading price as of March 31, 2000.
Past performance is no guarantee of future results. Investment return, dividend rate and share price will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.