NEWPORT BEACH, Calif., Jan. 31, 2001 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period October 1, 2000, through December 31, 2000 (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 ("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 more than $215 billion of assets under management as of December 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
12/31/00 NYSE Share Price Net Asset Value
Fourth quarter 8.76% 4.02%
One year 16.60% 10.50%
Three years (annualized) 6.98% 6.70%
Five years (annualized) 10.30% 7.95%
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 4.21%, 11.63%, 6.36% and 6.46% for the three months, one year, three years and five years ended December 31, 2000, respectively (3 and 5 year numbers are annualized).
Price Information
Pricing Date NYSE Share Price Net Asset Value
December 31, 2000 $12.5625 $12.86
September 30, 2000 $12.0000 $12.82
December 31, 1999 $12.0000 $12.89
Premium/(Discount) to Net Asset Value
December 31, 2000 (2.31)%
September 30, 2000 (6.40)%
December 31, 1999 (6.90)%
Dividend Information
Regular monthly dividend per share: $ 0.09375
Special dividend per share (declared December 14, 2000) $ 0.19000
Total dividends declared in the quarter: $ 0.47125
Total dividends declared for calendar 2000: $1.31500
Annualized dividend yield at 12/31/00 based on
NYSE share price: 8.96%*
Annualized dividend yield at 12/31/00 based on
net asset value: 8.75%*
* Excluding the special dividend declared on 12/14/00.
Portfolio Statistics
The Fund's investment portfolio had the following characteristics
as of
December 31, 2000:
Net Assets: $142mm
Average Duration: 5.56 years
Average Maturity: 6.99 years
Quality Ratings: 12.8% AAA, 8.4% AA, 10.6% A, 33.5% BBB,
26.2% BB, 7.8% B, 0.7% less than B
Average Quality: BBB
Sector Weightings: 16% Multi-family (apartment buildings),
16% Healthcare (hospitals and nursing
care facilities), 9% Hospitality
(hotels and motels),36% Multi-class
(a mix of all commercial property
types, including office buildings and
industrial properties), 10% Real Estate
ABS, 5% Corporate, 8% Other
Market Commentary
Treasuries rallied in the fourth quarter, capping a strong year of double-digit returns. Yields fell across the maturity spectrum during the quarter amid clear signs of slower growth and conviction that the Federal Reserve would soon cut interest rates. Yields decreased over the fourth quarter in a range from 0.31% for 3-month Treasuries to as much as 0.88% for the intermediate 2-year Treasury. For the year, yields plunged as much as 1.37%, with the sharpest declines coming in the middle of the yield curve. The rally in intermediates produced a steepening of the 5- to 30-year portion of the curve, which was relatively flat when the year began.
The Fed raised rates six times to cool the economy between June 1999 and May 2000, based upon the assumption that inflation posed the greatest risk to sustainable growth. Leaving rates unchanged during the second half of the year, the central bank shifted emphasis away from inflation at its December meeting. Setting the stage for an easing cycle, the Fed stated, "risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future." In fulfillment of this expectation, the Fed acted to lower the fed funds rate by 0.50% on two occasions during January 2001 to 5.50%.
The fourth quarter provided abundant evidence of a weakening economy. The government reported that the U.S. economy expanded at a 2.2% annual rate in the third quarter, the weakest pace in four years and less than half of the 5.6% rate posted in the second quarter. Unemployment claims, among the first harbingers of a downturn, rose sharply. Consumer confidence began to fall, despite holding near record highs for most of the year. Industrial production declined, while dozens of companies ranging from household goods to software to autos issued warnings that profits would slow.
Treasuries outpaced most credit-sensitive fixed income sectors for the quarter and the full year. Corporates lagged well behind Treasuries, weighed down by rising defaults and concern that profits and cash flow would erode further as the economy slowed. Mortgages, including commercial mortgage backed issues, fared better than corporates, posting duration-adjusted returns close to Treasuries for the quarter. Mortgages' strong credit quality and relatively high yields offset heightened market volatility.
The Fund's portfolio of commercial mortgage backed securities ("CMBS") posted a 4.02% return for the fourth quarter based on net asset value and a favorable 8.76% return 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 4.21% for the same period. Share price performance was significantly boosted as the Fund's trading discount to its net asset value narrowed over the quarter from -6.40% to -2.31%. Longer term performance continues to be strong with the Fund posting an annualized return based on NYSE share price of 6.98% for the three-year period and 10.30% for the five-year period ended December 31, 2000, outperforming the Index returns of 6.36% and 6.46% over the same periods. The Fund maintained an uninterrupted and constant dividend throughout the quarter, holding the monthly per share rate steady at $0.09375. In addition, a special dividend of $0.19 per share was declared towards the end of the quarter from ordinary income accumulated over the year in excess of the Fund's regular monthly distributions. These dividend payouts, excluding the special dividend, equate to an annualized dividend yield of 8.96% based on the Fund's NYSE trading price as of December 31, 2000.
For further information, please contact Jeff Sargent, PIMCO Commercial Mortgage Securities Trust, Inc., at (949) 720-4712.
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.