NEWPORT BEACH, Calif., July 31, 2000 (PRIMEZONE) -- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM) today released its investment performance results and statistical portfolio information for the period April 1, 2000, through June 30, 2000 (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 ("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 $199 billion of assets under management as of June 30, 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
06/30/00 NYSE Share Net Asset Value
Second quarter 0.27% 2.00%
One year -2.11% 5.29%
Three years (annualized) 5.26% 6.37%
Five years (annualized) 8.31% 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 1.74%, 4.56%, 6.04% and 6.25% for the three months, one year, three years and five years ended June 30, 2000, respectively (3 and 5 year numbers are annualized).
Price Information
Pricing Date NYSE ShareNet Asset Value
June 30, 2000 $12.1250 $12.78
March 31, 2000 $12.3750 $12.81
June 30, 1999 $13.6250 $13.29
Premium/(Discount) to Net Asset Value
June 30, 2000 (5.13)%
March 31, 2000 (3.40)%
June 30, 1999 2.52 %
Dividend Information
Regular monthly dividend per share: $ 0.09375
Total dividends declared in the quarter: $ 0.28125
Annualized dividend yield at 06/30/00
based on NYSE share 9.28%
Annualized dividend yield at 06/30/00
based on net asset 8.80%
Portfolio Statistics
The Fund's investment portfolio had the following characteristics
as of June 30, 2000:
Net Assets: $141mm
Average Duration: 4.86 years
Average Maturity: 6.98 years
Quality Ratings: 14.4% AAA, 9.4% AA, 9.9% A, 35.1% BBB,
23.4% BB, 7.8% B
Average Quality: BBB
Sector Weightings: 22% Multi-family (apartment buildings),
18% (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),
0% Commercial, 13% Other
Market Commentary
In general, short and intermediate interest rates fell modestly amid cautious optimism that Federal Reserve tightening was beginning to cool the economy and contain inflation. Yields declined an average of 0.15% on 1-year, 2-year and 5-year Treasuries over the second quarter. In contrast, the 30-year Treasury yield increased 0.06%, closing the second quarter at 5.90%. The yield curve continues to be inverted, with 5-year Treasuries yielding 6.18% and 30-year Treasuries offering only a slight 0.04% yield advantage over their 3-month counterparts.
The Federal Reserve raised the federal funds rates by 0.50% to 6.50% on May 16, 2000, the highest level in nine years. It was the central bank's sixth rate increase since June 1999. The size of the increase confirmed that the Fed's recent policy of gradual, 0.25% rate hikes was insufficient to cool an economy that grew by more than 5% in each of the past three quarters. That pace is faster than the Fed believes is possible without triggering an increase in inflation.
The Fed left rates unchanged in late June at their regularly scheduled meeting amid signs that higher rates were starting to have the desired effect. Economic reports in April and May showed the first back-to-back declines in retail sales in two years, falling employment, reduced new home construction and little change in consumer prices.
Nevertheless, the Fed said, "signs that growth in demand is moving to a sustainable pace are still tentative and preliminary." The central bank also warned of "heightened inflation pressures in the foreseeable future," suggesting that more tightening may be needed. Rising energy prices, especially for retail gasoline, were one reason for concern. Risks posed by economic imbalances such as the tight labor market, an expanding U.S. trade deficit and high levels of consumer and corporate debt also remained firmly in place.
Treasuries and agency mortgages outperformed as investors continued to favor securities with superior credit quality. Yield spreads between commercial mortgage backed securities ("CMBS") and 10-year Treasuries leveled-off over the second quarter with spreads on both AAA-rated and A-rated CMBS remaining around 1.63% and 1.96%, respectively.
The Fund's portfolio of CMBS posted a favorable 2.00% return for the second quarter based on net asset value and a 0.27% return based on its NYSE share price. The Fund's total return based on net asset value outperformed the 1.74% return of the Lehman Brothers Aggregate Bond Index (which includes Treasury, investment-grade corporate and residential mortgage-backed securities) over the three-month period. NYSE share price performance lagged the Fund's return based on net asset value due to a significant widening of the Fund's trading discount to its net asset value over the quarter from -3.40% to -5.13%. Longer term performance continues to be strong with the Fund posting an annualized return based on NYSE share price of 8.31% for the five-year period ended June 30, 2000, outperforming the Index return of 6.25% over the same period. 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 9.28% based on the Fund's NYSE trading price as of June 30, 2000.
For further information, please contact Jeff Sargent, PIMCO Commercial Mortgage Securities Trust, Inc., at (949) 720-6519.
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.