NEWPORT BEACH, Calif., Jan. 28, 1999 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE: PCM) today released its investment performance results and statistical portfolio information for the period October 1, 1998, through December 31, 1998 (fourth 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. 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 $157 billion of assets under management as of December 31, 1998, 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
12/31/98 NYSE Share Price Net Asset Value
Fourth quarter 5.24 % (0.20)%
One year 9.86 % 7.33 %
Three years (annualized) 13.58 % 9.00 %
Five years (annualized) 9.85 % 9.11 %
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 0.34%, 8.69%, 7.29% and 7.27% (annualized), respectively, for the three months, one year, three years and five years ended December 31, 1998.
Price Information
Pricing Date NYSE Share Price Net Asset Value
December 31, 1998 $ 13.7500 $ 13.74
September 30, 1998 13.4375 14.15
December 31, 1997 13.6875 13.97
Premium/(Discount) to Net Asset Value
December 31, 1998 0.07 %
September 30, 1998 (5.04)%
December 31, 1997 (2.02)%
Dividend Information
Regular monthly dividend per share: $ 0.09375
Special dividend per share (declared December 16, 1998): $ 0.10
Total dividends declared in the quarter: $ 0.38125
Total dividends declared for calendar 1998: $ 1.225
Annualized dividend yield at 12/31/98 based
on NYSE share price: 8.91%
Annualized dividend yield at 12/31/98 based
on net asset value: 8.92%
Portfolio Statistics
The Fund's investment portfolio had the following
characteristics as of December 31, 1998:
Net Assets: $151,244,415
Average Duration: 4.76 years
Average Maturity: 6.00 years
Quality Ratings: 18.22% AAA, 8.68% AA, 16.27% A, 30.45% BAA,
17.81 % BB, 8.57% B
Average Quality: A-
Sector Weightings: 29% Multi-family (apartment buildings),
18% Healthcare (hospitals and nursing care
facilities), 8% Hospitality (hotels and motels),
1% Retail (shopping centers), 36% Multi-class (a
mix of all commercial property types, including
office buildings and industrial properties),
1% Commercial Paper, 7% Other
Market Commentary and Outlook
The financial markets experienced remarkable volatility worldwide during 1998 as investors reacted to international and political discord. Many domestic and foreign investors re-allocated their assets to safe havens during the third quarter, cutting short the impressive stock market growth of the first half of the year. This heightened caution reduced liquidity in most bond markets. Yield premiums required for holding non-Treasury bonds doubled for some securities between mid-summer and October.
However, global markets stabilized and liquidity began to return during the fourth quarter after the Federal Reserve cut interest rates by 0.50% and other central banks followed suit. As confidence returned, Treasuries lost some appeal as a safe haven. Investors shifted money to other bond market sectors and to stocks, which surged to record highs. Yield premiums on commercial mortgage-backed securities ("CMBS") and corporate debt narrowed, though they remained well above levels seen earlier in the year.
Hopes of additional rate cuts in the near term faded in the fourth quarter as the U.S. economy remained strong, reducing demand for Treasuries. As a result, yields on U.S. Treasuries rose 0.10% to 0.32% across all maturity ranges, with yields on intermediate maturity Treasuries rising the furthest. A more flattened yield curve resulted by quarter-end, with 30-year Treasury bonds offering only a 0.55% yield advantage over their 6-month counterparts.
The Fund's CMBS portfolio posted a (0.20)% return for the fourth quarter based on net asset value and a favorable 5.24% return based on NYSE share price. Share price performance was boosted by a substantial narrowing of the Fund's trading discount over the quarter from (5.04)% to 0.07%, which allowed the Fund to strongly outperform the 0.34% return of the Lehman Brothers Aggregate Bond Index (which includes Treasury, investment-grade corporate and residential mortgage-backed securities). Longer term performance has been solid with the Fund posting a 9.85% return based on NYSE share price for the five-year period ended December 31, 1998, versus the Index return of 7.27%. The Fund maintained an uninterrupted and constant dividend throughout the year, holding the monthly per share rate steady at $0.09375. In addition, a special dividend of $0.10 per share was declared at quarter-end from ordinary income accumulated over the year in excess of the Fund's regular monthly distributions. These dividend pay-outs equate to an annualized dividend yield of 8.91% based on the Fund's NYSE trading price as of December 31, 1998.
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.