NEWPORT BEACH, Calif., July 30, 1999 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period April 1, 1999, through June 30, 1999 (second 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 $171 billion of assets under management as of June 30, 1999, 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
6/30/99 NYSE Share Price Net Asset Value
Second quarter 6.03% (0.37)%
One year 10.50% 2.55%
Three years (annualized) 13.90% 9.47%
Five years (annualized) 12.40% 9.81%
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, declined 0.88%, and rose 3.15%, 7.23% and 7.83% (3 and 5 year numbers are annualized), respectively, for the three months, one year, three years and five years ended June 30, 1999.
Price Information
Pricing Date NYSE Share Price Net Asset Value
June 30, 1999 13.6250 13.29
March 31, 1999 13.1250 13.62
June 30, 1998 13.5000 14.16
Premium/(Discount) to Net Asset Value
June 30, 1999 2.52%
March 31, 1999 (3.63)%
June 30, 1998 (4.67)%
Dividend Information
Regular monthly dividend per share: 0.09375
Total dividends declared in the quarter: $ 0.28125
Annualized dividend yield at 6/30/99
based on NYSE share price: 8.26%
Annualized dividend yield at 6/30/99
based on net asset value: 8.47%
Portfolio Statistics
The Fund's investment portfolio had the following characteristics as of June 30, 1999:
Net Assets: $146,268,630.30
Average Duration: 5.07 years
Average Maturity: 6.39 years
Quality Ratings: 21.31% AAA, 9.86% AA, 15.07% A,
24.56% BBB, 19.36% BB, 9.84% B
Average Quality: BAA-
Sector Weightings:
28% Multi-family (apartment buildings),
18% Healthcare (hospitals and nursing care
facilities), 8% Hospitality (hotels and motels),
1% Retail (shopping centers), 34% Multi-class (a mix
of all commercial property types, including office
buildings and industrial properties),
3% Commercial Paper, 8% Other
Market Commentary
Interest rates rose sharply during the second quarter as strong economic growth in the U.S. and signs of recovery elsewhere in the world sparked concern that the Federal Reserve would boost interest rates to prevent a resurgence in inflation. Yields on U.S. Treasuries rose across most maturity ranges with the yield on the 30-year Treasury bond ending the quarter at 5.97%, up 0.34% from the previous quarter, after reaching a high of 6.19%. Yields on 10-year Treasuries climbed a more dramatic 0.56% finishing the quarter at 5.79%. The yield curve remained steep at quarter-end, with 30-year Treasury bonds offering a 1.21% yield advantage over their 3-month counterparts.
On the final day of the quarter, the Fed raised the closely watched federal funds rate by 0.25% to 5.00% in a pre-emptive move to prevent accelerating inflation. At the same time, the Fed dropped its bias toward tightening. Removal of the Fed's tightening bias came amid encouraging news about inflation. After a surprise jump in the April consumer price index, led by higher energy prices, the CPI was unchanged in May. A reduction in new home sales due to higher borrowing costs suggested the economy might be slowing, reducing inflationary pressure. Economic expansion kept labor markets tight, with unemployment at a 29-year low, but growth in wage costs slowed. Workers were willing to accept smaller wage pay increases with inflation subdued and real incomes rising. With goods inflation relatively benign, Fed tightening was aimed more at potential asset bubbles in housing and stock markets, where price gains have lifted consumer confidence to record highs and stimulated increases in consumption that fueled economic growth.
In this environment, the Fund's portfolio of commercial mortgage-backed securities ("CMBS") posted a -0.37% return for the second quarter based on net asset value and a favorable 6.03% return based on its NYSE share price. Share price performance was significantly boosted as the Fund's trading discount to its net asset value reversed, closing the quarter at a 2.52% premium. This allowed the Fund to strongly outperform the -0.88% return of the Lehman Brothers Aggregate Bond Index (which includes Treasury, investment-grade corporate and residential mortgage-backed securities) over the same period. Longer term performance has been strong with the Fund posting a return based on NYSE share price of 13.90% for the three-year period and 12.40% for the five-year period ended June 30, 1999, outperforming the Index return of 7.23% and 7.83% 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 pay-outs equate to an annualized dividend yield of 8.26% based on the Fund's NYSE trading price as of June 30, 1999.
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.