SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
------- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-23972
AMERICAN MORTGAGE ACCEPTANCE COMPANY
------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 13-6972380
------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
625 Madison Avenue, New York, New York 10022
---------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
============ ===========
June 30, December 31,
2002 2001
------------ -----------
ASSETS
Investments in mortgage loans $ 20,061 $ 17,799
Investments in GNMA certificates-
available for sale 79,990 50,060
Investment in ARCap 20,241 20,246
Cash and cash equivalents 11,116 1,018
Notes receivable 19,617 11,373
Accrued interest receivable 871 570
Other assets 443 916
------------ -----------
Total assets $ 152,339 $ 101,982
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Repurchase facilities payable $ 61,451 $ 43,610
Accrued interest payable 44 22
Accounts payable and accrued expenses 506 1,348
Due to Advisor and affiliates 464 331
Distributions payable 2,386 1,392
------------ -----------
Total liabilities 64,851 46,703
------------ -----------
Commitments and contingencies
Shareholders' equity:
Shares of beneficial interest; $.10 par value;
25,000,000 shares authorized; 6,738,826 issued
and 6,363,630 outstanding and 4,213,826 issued
and 3,838,630 outstanding in 2002 and 2001,
respectively 674 421
Treasury shares of beneficial interest;
375,196 shares (38) (38)
Additional paid-in capital 99,487 68,841
Distributions in excess of net income (14,601) (14,505)
Accumulated other comprehensive income 1,966 560
------------ -----------
Total shareholders' equity 87,488 55,279
------------ -----------
Total liabilities and shareholders' equity $ 152,339 $ 101,982
============ ===========
See accompanying notes to consolidated financial statements
2
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in the thousands except per share amounts)
(Unaudited)
====================== ======================
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2002 2001 2002 2001
---------------------- ----------------------
Revenues:
Interest income:
Mortgage loans $ 609 $ 1,019 $ 1,010 $ 1,907
GNMA certificates 1,370 379 2,454 495
Notes receivable 627 61 1,114 107
Temporary investments 13 10 24 27
Equity in earnings of ARCap 608 592 1,200 1,184
Other income 76 25 136 30
---------- ---------- ---------- ----------
Total revenues 3,303 2,086 5,938 3,750
---------- ---------- ---------- ----------
Expenses:
Interest 307 361 579 637
General and administrative 164 112 284 232
Fees to advisor 371 178 728 296
FNMA loan program 3 -- 358 --
Amortization -- 11 6 30
---------- ---------- ---------- ----------
Total expenses 845 662 1,955 1,195
---------- ---------- ---------- ----------
Net gain on repayments of
GNMA certificates and
mortgage loans -- -- 614 --
---------- ---------- ---------- ----------
Net income $ 2,458 $ 1,424 $ 4,597 $ 2,555
========== ========== ========== ==========
Net income per share (basic
and diluted) $ .39 $ .37 $ .81 $ .67
========== ========== ========== ==========
Weighted average shares
outstanding (basic and
diluted) 6,363,630 3,838,630 5,666,116 3,838,630
========== ========== ========== ==========
See accompanying notes to consolidated financial statements
3
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Consolidated Statement of Changes in Shareholders' Equity
(Dollars in thousands)
(Unaudited)
Shares of Beneficial Treasury Shares of
Interest Beneficial Interest
--------------------- ---------------------
Shares Amount Shares Amount
--------- --------- -------- ---------
Balance at January 1, 2002 4,213,826 $ 421 (375,196) $ (38)
Comprehensive income:
Net income -- -- -- --
Other comprehensive income:
Unrealized holding gain arising
during the period
Less: reclassification adjustment
for gain included in net income
Total other comprehensive gain
Comprehensive income
Common share issuance 2,525,000 253
Distributions
--------- --------- -------- ---------
-- -- -- --
Balance at June 30, 2002 6,738,826 $ 674 (375,196) $ (38)
========= ========= ======== =========
Accumulated
Additional Distributions Other
Paid-in in Excess Comprehensive Comprehensive
Capital of Net Income Income Income Total
--------- ------------- ------------- ------------- ---------
Balance at January 1, 2002 $ 68,841 $ (14,505) $ 560 $ 55,279
Comprehensive income:
Net income -- 4,597 $ 4,597 -- 4,597
Other comprehensive income:
Unrealized holding gain arising
during the period 2,020
Less: reclassification adjustment
for gain included in net income (614)
-------------
Total other comprehensive gain 1,406 1,406 1,406
-------------
Comprehensive income $ 6,003
=============
Common share issuance 30,646 30,899
Distributions (4,693) -- (4,693)
--------- ------------- ----------- ---------
--
Balance at June 30, 2002 $ 99,487 $ (14,601) $ 1,966 $ 87,488
========= ============= =========== =========
See accompanying notes to consolidated financial statements.
4
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
=====================
Six Months Ended
June 30,
---------------------
2002 2001
-------- --------
Cash flows from operating activities:
Net income $ 4,597 $ 2,555
Adjustments to reconcile net income to net cash
provided by operating activities:
Net gain on repayments of GNMA
Certificates and mortgage loans (614) --
Equity in earnings of ARCap, in excess of
(less than) distributions received 5 (191)
Amortization - deferred financing costs 6 30
Amortization - loan premium and
origination costs (61) 3
Accretion of GNMA discount 6 (11)
Accretion of deferred income -- (26)
Changes in operating assets and liabilities:
Accrued interest receivable (301) 166
Other assets 48 6
Due to Advisor and affiliates 133 (674)
Accounts payable and accrued expenses (842) 17
Accrued interest payable 22 24
-------- --------
Net cash provided by operating activities 2,999 1,899
-------- --------
Cash flows from investing activities:
Increase in investment in mortgage loans (2,224) (19,622)
Periodic principal payments of mortgage loans 23 134
Funding of notes receivable (8,244) (1,424)
Principal repayments of GNMA Certificates 197 166
Increase in investment in GNMA Certificates (28,113) --
Decrease (increase) in other assets 419 (83)
-------- --------
Net cash used in investing activities (37,942) (20,829)
-------- --------
continued
5
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
=====================
Six Months Ended
June 30,
---------------------
2002 2001
-------- --------
Cash flows from financing activities:
Proceeds from repurchase facilities payable 17,841 32,443
Distribution paid to shareholders (3,699) (2,783)
Increase in deferred loan costs -- (42)
Issuance of common shares 30,899 --
-------- --------
Net cash provided by financing activities 45,041 29,618
-------- --------
Net increase in cash and cash equivalents 10,098 10,688
Cash and cash equivalents at the beginning
of the period 1,018 1,632
-------- --------
Cash and cash equivalents at the end of the
period $ 11,116 $ 12,320
======== ========
Supplemental information:
Interest paid $ 557 $ 613
======== ========
Consolidation of former unconsolidated subsidiary:
Increase in investment in mortgage loans $ 8,353
Decrease in notes receivable (7,264)
Decrease in investment in unconsolidated
subsidiary (1,089)
--------
$ --
--------
Conversion of FHA mortgage loans to GNMA certificates:
Investment in GNMA certificates $(34,515)
Decrease in investment in mortgage loans 34,515
--------
$ --
--------
See accompanying notes to consolidated financial statements.
6
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
Note 1 - General
American Mortgage Acceptance Company (formerly American Mortgage Investors
Trust) (the "Company") was formed on June 11, 1991 as a Massachusetts business
trust. The Company elected to be treated as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended.
The Company's business plan focuses on government insured and uninsured
mortgages secured by multifamily properties, which may take the form of
government insured first mortgages and uninsured mezzanine loans, construction
loans and bridge loans. Additionally, the Company has indirectly invested in
subordinate commercial mortgage-backed securities and may invest in other real
estate assets, including non-multifamily mortgages.
Effective April 26, 1999, upon authorization by the Board of Trustees, the
Company's name was changed from American Mortgage Investors Trust to American
Mortgage Acceptance Company. The Company's shares of beneficial interest (the
"Shares") commenced trading on the American Stock Exchange on July 1, 1999 under
the symbol "AMC".
In February 2002, the Company sold to the public 2.5 million common shares at a
price of $13.50 per share. The net proceeds from this offering, approximately
$31 million net of underwriter's discount and expenses, has been used to make
additional investments.
The Company is governed by a board of trustees comprised of three independent
trustees and two trustees who are affiliated with Related Capital Company
("Related"). The Company has engaged Related AMI Associates, Inc. (the
"Advisor"), an affiliate of Related, to manage its day-to-day affairs. The
Advisor has subcontracted with Related to provide the services contemplated.
Through the Advisor, Related offers the Company a core group of experienced
staff and executive management providing the Company with services on both a
full and part-time basis. These services include, among other things,
acquisition, financial, accounting, capital markets, asset monitoring, portfolio
management, investor relations and public relations services. The Company
believes that it benefits significantly from its relationship with Related,
because Related provides the Company with resources that are not generally
available to smaller-capitalized, self-managed companies.
The consolidated financial statements include the accounts of the Company and
two wholly-owned subsidiaries which it controls: AMAC Repo Seller and AMAC/FM
Corporation. All intercompany accounts and transactions have been eliminated in
consolidation. Unless otherwise indicated, the "Company" as hereinafter used,
refers to American Mortgage Acceptance Company and its subsidiaries.
The consolidated financial statements of the Company have been prepared without
audit. In the opinion of management, the financial statements contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position of the Company as of June 30, 2002 and the
results of its operations and its cash flows for the three and six months ended
June 30, 2002 and 2001. However, the operating results for the interim periods
may not be indicative of the results for the full year.
7
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America ("GAAP") have been condensed or
omitted. It is suggested that these financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-K for the year ended December 31, 2001.
The preparation of the consolidated financial statements in conformity with GAAP
requires the Advisor to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements as well as the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
No. 141, "Business Combinations (SFAS 141) and Statement No. 142, "Goodwill and
Other Intangible Assets" (SFAS 142). These statements establish new standards
for accounting and reporting for business combinations and for goodwill and
intangible assets resulting from business combinations. SFAS 141 applies to all
business combinations initiated after June 30, 2001; the Company implemented
SFAS 142 on January 1, 2002. Implementation of these statements did not have a
material impact on the Company's consolidated financial statements.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". SFAS No. 143 requires the fair value of a liability or an asset
retirement obligation to be recorded in the period in which it is incurred. SFAS
No. 143 is not effective until January 1, 2003. Management does not believe the
implementation of SFAS No. 143 will have a material impact on the Company's
consolidated financial statements.
In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long Lived Assets" (effective January 1, 2002). SFAS
No. 144 supercedes existing accounting literature dealing with impairment and
disposal of long-lived assets, including discontinued operations. It addresses
financial accounting and reporting for the impairment of long-lived assets and
for long-lived assets to be disposed of, and expands current reporting for
discontinued operations to include disposals of a "component" of an entity that
has been disposed of or is classified as held for sale. The Company implemented
SFAS No. 144 on January 1, 2002. Implementation of SFAS No. 144 did not have a
material impact on the Company's consolidated financial statements.
In April 2002, the FASB issued Statement No. 145 "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections".
SFAS No. 145 among other things, rescinds SFAS No. 4, "Reporting Gains and
Losses from Extinguishment of Debt", and accordingly, the reporting of gains and
losses from the early extinguishments of debt as extraordinary items will only
be required if they meet the specific criteria for extraordinary items included
in Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations". The rescission of SFAS no. 4 is effective January 1, 2003.
Management does not believe the implementation of SFAS 145 will have a material
impact on the Company's consolidated financial statements.
In July 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities. SFAS No. 146 replaces current
accounting literature and requires the recognition of costs associated with exit
or disposal activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. SFAS No. 146 is not effective until
January 1, 2003. The Company does not anticipate the adoption of this statement
will have a material effect on the Company's consolidated financial statements.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
8
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
Note 2 - Investments in Mortgage Loans
Information relating to investments in mortgage loans as of June 30, 2002 is as
follows:
Final Periodic
Maturity Call Interest Payment Prior
Description Date Date Rate (B) Terms Liens
----------- -------- -------- -------- --------- ---------
First Mortgage Loans (E):
Stony Brook II
East Haven, CT (L) 125 Units 6/37 12/06 7.625 (F) --
Sunset Gardens
Eagle Pass, TX 60 Units 9/03 TBD 11.50% (H) --
Northbrooke
Harris County, TX 240 Units 8/43 TBD 7.45% (K) --
Subtotal First Mortgage Loans
Stabilized Properties
Stony Brook II
East Haven, CT 125 Units 6/37 12/06 15.33% (H) 8,308,969
Plaza at San Jacinto
Houston, TX (I) 132 Units 1/43 6/11 11.00% (H) 6,638,300
Subtotal Stabilized Mezzanine
Loans
Properties in Construction
The Hollows
Greenville, NC 184 Units 1/42 TBD 10.00% (H) 8,481,092
Elmhurst Village
Oveido, FL 313 Units 1/42 TBD 10.00% (H) 21,716,633(J)
The Reserve at Autmn Creek
Friendswood, TX 212 Units 1/42 TBD 10.00% (H) 15,538,670(J)
Club at Brazos (I)
Rosenberg, TX 200 Units 5/43 TBD 10.00% (H) 14,363,800
Northbrooke
Harris County, TX 240 Units 8/43 TBD 11.50% (H) --
Subtotal Construction Mezzanine Loans
Subtotal Mezzanine Loans
Total Mortgage Loans
Interest Income
Earned Applicable
Outstanding To the Six Months
Face Amount of Carrying Amount Ended
Mortgages (C) of Mortgages (D) June 30, 2002
--------------- ---------------- -----------------
First Mortgage Loans (E):
Stony Brook II
East Haven, CT (L) $8,308,969 $8,308,969 $ 317,141
Sunset Gardens
Eagle Pass, TX 892,902 869,393 30,320
Northbrooke
Harris County, TX -- -- 15,458
-------------------------------------------------
-------------------------------------------------
Subtotal First Mortgage Loans 9,201,871 9,178,362 362,919
-------------------------------------------------
Stabilized Properties
Stony Brook II
East Haven, CT 763,909 663,166 45,365
Plaza at San Jacinto
Houston, TX (I) 1,250,000 1,221,384 72,577
-------------------------------------------------
Subtotal Stabilized Mezzanine
Loans 2,013,909 1,884,550 117,942
-------------------------------------------------
Properties in Construction
The Hollows
Greenville, NC 1,549,200 1,389,786 82,239
Elmhurst Village
Oveido, FL 2,874,000 2,438,461 158,637
The Reserve at Autmn Creek
Friendswood, TX 1,987,000 1,924,502 97,791
Club at Brazos (I)
Rosenberg, TX 1,962,000 1,883,770 99,032
Northbrooke
Harris County, TX 1,500,000 1,361,976 91,436
-------------------------------------------------
Subtotal Construction Mezzanine
Loans 9,872,200 8,998,495 529,135
-------------------------------------------------
Subtotal Mezzanine Loans 11,886,109 10,883,045 647,077
-------------------------------------------------
Total Mortgage Loans $21,087,980 $20,061,407 $1,009,996
=================================================
9
(A) Loans are subject to mandatory prepayment at the option of the Company 10
years after construction completion, with one year's notice. Loans with a
call date of "TBD" are still under construction.
(B) Interest on the mezzanine loans is based on a fixed percentage of the
unpaid principal balance of the related first mortgage loan (prior liens).
The amount shown is the approximate effective rate earned on the balance of
the mezzanine loan. The mezzanine loans also provide for payments of
additional interest based on a percentage of cash flow remaining after debt
service (generally 50%) and participation in sale or refinancing proceeds
(generally 25%) and certain provisions that cap the Company's total yield,
including additional interest and participations, over the term of the
loan.
(C) No principal amounts of mortgage loans are subject to delinquent interest
as of June 30, 2002.
(D) Carrying amounts of the mezzanine loans include unamortized origination
costs and fees and loan discounts.
(E) Interest and principal payments on first mortgage loans are insured by the
U.S. Department of Housing and Urban Development.
(F) Requires monthly payments of principal and interest based on a 40 year
amortization period. Loan is subject to 5-year lockout against prepayments,
as well as a prepayment penalty structure during the second 5-year term of
the loan.
(G) The principal balance of the mezzanine loans is secured by the partnership
interests of the entity that owns the underlying property and a third
mortgage deed of trust. Interest payments on the mezzanine loans are
secured by a second mortgage deed of trust and are guaranteed for the first
thirty six months after construction completion by an entity related to the
general partner of the entity that owns the underlying property.
(H) Interest only payments are due monthly, with loan balance due at maturity.
(I) The funding of this mezzanine loan is based on property level operational
achievements. The Company does not hold the first mortgage loan relating to
this mezzanine loan.
(J) The first mortgage loans related to those properties were converted into
GNMA Certificates and are held by the Company.
(K) The Northbrooke first mortgage loan was converted from an FHA mortgage loan
to an GNMA Certificate on May 24, 2002.
(L) This first mortgage loan is pledged to secure the Company's obligation
under a first loss protection agreement with Fannie Mae - See Notes 9 and
10.
10
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
Note 3 - Investments in GNMA Certificates-Available for Sale Information
relating to investments in GNMA certificates as of June 30, 2002 is as follows:
Interest
Income
Earned
Date Applicable
Purchase/ Amortized Unrealized to the
Final Stated Principal Cost at Gain(Loss) Balance at Six Months
Certificate Payment Interest at June at June at June at June Ended June
Name Number Due Rate 30, 2002 30, 2002 30, 2002 30, 2002 30, 2002
---- ----------- -------- -------- ------------- ----------- ---------- ----------- ----------
Western Manor (1) 0355540 7/27/94 7.125% $ 2,474,818 $ 2,475,688 $ 66,053 $ 2,541,741 $ 98,090
3/15/29
Copper Commons (1) 0382486 7/28/94 8.500% 2,098,148 2,167,036 (19,128) 2,147,908 89,685
8/15/29
SunCoast Capital Group, G002412 6/23/97 7.000% 719,414 719,939 23,031 742,970 27,928
Ltd. (1) 4/20/27
Hollows Apts. (2) 511909 5/29/01 -- -- -- -- 196,859
Elmhurst Village (1) 549391 6/28/01 7.745% 21,716,633 21,716,633 593,191 22,309,824 819,281
1/1/42
Reserve at Autumn Creek (1) 448747 6/28/01 7.745% 15,538,670 5,538,670 1,550,185 17,088,855 588,046
1/1/42
Casitas at Montecito 519289 3/11/02 7.300% 5,700,686 6,090,720 (390,034) 5,700,686 116,233
10/15/42
Village at Marshfield (1) 519281 3/11/02 7.475% 19,906,384 21,552,222 258,031 21,810,253 418,763
1/15/42
Cantera Crossing 532662 3/28/02 6.500% 3,906,058 3,859,084 46,974 3,906,058 57,595
6/1/29
Fillmore Park 536739 3/28/02 6.700% 876,053 886,270 (10,217) 876,053 11,168
10/15/42
Northbrooke 548972 5/24/02 7.080% 2,865,484 3,017,381 (151,899) 2,865,482 30,745
8/1/43
-----------------------------------------------------------------
Total $75,802,348 $78,023,643 $1,966,187 $79,989,830 $2,454,393
=================================================================
(1) These GNMA Certificates are pledged as collateral for borrowings under the
repurchase facility - See Note 5.
(2) This GNMA Certificate was sold March 25, 2002.
11
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
The amortized cost, unrealized gain and fair value for the investment in GNMA
Certificates at June 30, 2002 and December 31, 2001 were as follows:
(Dollars in thousands)
June 30, December 31,
2002 2001
----------- -------------
Amortized cost $78,024 $49,500
Unrealized gain 1,966 560
------- -------
Fair Value $79,990 $50,060
======= =======
For the six months ended June 30, 2002, there were gross unrealized gains and
losses of $2,537,465 and $571,278, respectively. For the year ended December 31,
2001, there were gross unrealized gains and losses of $579,252 and $18,865,
respectively.
On March 25, 2002, the Company sold the Hollows GNMA Certificate for
approximately $9.6 million. The amortized cost at the date of the sale was
approximately $9.0 million, resulting in a gain of approximately $614,000. The
Company recorded the sale on the trade date of March 25, 2002. The settlement
date was in April 2002.
12
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
NOTE 4 - Notes Receivable
The Company's notes receivable are collateralized by equity interest in the
owner of the related property and consists of the following as of June 30, 2002:
Remaining
Number of Outstanding Committed
Apartment Carrying Principal Balance to Interest
Property Location Units Amount Balance Fund Rate Maturity
------------------------------------------------------------------------------------------------------------------------------------
Alexandrine Detroit, MI 30 $ 377,320 $ 378,000 $ -- 12.50% August 2002
Coronado
Terrace San Diego, CA 312 566,730 581,360(1) 1,418,640 11.00% December 2002
Plaza Manor National City, CA 372 1,491,646 1,499,010 990 11.00% September 2002
Rancho
Verde San Jose, CA 700 4,497,780 4,499,999 -- 11.00% August 2002
Concorde at
Palm Houston, TX 360 3,821,138 3,850,000 -- 12.00% December 2003
Parwood Long Beach, CA 528 1,963,641 2,000,000(1) 2,600,000 11.00% January 2004
Concord at
Little York Houston, TX 276 3,463,945 3,500,000 -- 12.00% February 2004
Concord at
Gulfgate Houston, TX 288 3,435,221 3,500,000 -- 12.00% May 2004
------------------------------------------------------------
Total 2,866 $19,617,421 $19,808,369 $4,019,630
============================================================
(1) Funded on an as needed basis.
13
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
The Company's notes receivable pay interest only until maturity when the
principal is due. As of June 30, 2002, there were no past due amounts owed the
Company on any note.
NOTE 5 - Repurchase Facilities
During 2001, the Company was party to a $40 million repurchase facility with
Nomura Asset Capital Corporation, which enabled the Company to borrow up to 80%
(90% with a qualified hedge) of the fair market value of FHA loans owned by the
Company. The interest rate under this repurchase facility was LIBOR plus 1.25%.
As of December 31, 2001 there was no outstanding balance under this agreement.
The agreement was not renewed upon its expiration in February 2002.
Effective February 15, 2000, the Company also entered into a repurchase facility
with Nomura Securities International Inc. (the "Nomura Securities Repurchase
Facility"). This facility enables the Company to borrow up to 95% of the fair
market value of GNMA Certificates and other qualified mortgage securities owned
by the Company. Borrowings bear interest at LIBOR plus 0.50%. As of June 30,
2002 and December 31, 2001, the amounts outstanding under this facility were
$61,451,000 and $43,610,000 and interest rates were 1.89% and 2.58%,
respectively. Deferred costs relating to the Nomura Securities Repurchase
Facility have been fully amortized. All amounts outstanding at June 30, 2002,
had 30 day settlement terms and are collateralized by certain GNMA Certificates
as indicated in Note 3.
NOTE 6 - Related Party Transactions
The costs incurred to related parties for the three and six months ended June
30, 2002 and 2001 were as follows, all of which are paid to the Advisor:
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
2002 2001 2002 2001
-------------------------------------------------
Expense reimbursement $ 143 $ 111 $ 318 $ 172
Asset management fees 228 67 410 124
---------- ----------- ---------- ----------
$ 371 $ 178 $ 728 $ 296
========== ========== ========== =========
In December 2001, Charter Mac Corporation ("CM Corp") purchased 80% of PW
Funding Inc. ("PWF"). CM Corp is a wholly-owned subsidiary of Charter Municipal
Mortgage Acceptance Company ("Charter Mac"), a publicly traded entity, which is
managed by an affiliate of Related.
The Company has begun to use PWF as its servicing agent for mortgages.
Typically, the servicing agent retains a small percentage of the interest paid
on mortgage loans as their fee for servicing the loan.
The Company's notes receivable (see Note 4), the guarantee on Creekside
Apartments and standby bridge loan commitments described in Note 8 are to
limited partnerships where the general partner may be an affiliate of the
Advisor with a 1% interest in the limited partnership, and the 99% limited
partner is a limited partnership in which an affiliate of the Advisor owns a 1%
general partnership interest and one or more Fortune 500 companies own a 99%
limited partnership interest.
14
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
Note 7 - Earnings Per Share
Basic net income per share in the amount $.39 and $.37 and $.81 and $.67 for the
three and six months ended June 30, 2002 and 2001, respectively, equals net
income for the periods ($2,458,410 and $1,424,029 and $4,597,434 and $2,555,177,
respectively), divided by the weighted average number of shares outstanding
which was 6,363,630 and 3,838,630 and 5,666,116 and 3,838,630, respectively.
Because the Company had no dilutive securities outstanding during the six months
ended June 30, 2002 or 2001, diluted net income per share is the same as basic
net income per share.
Note 8 - Commitments and Contingencies
The Company completed a loan program with Fannie Mae which has agreed to fully
fund the origination of $250 million of Delegated Underwriter and Servicer loans
for apartment properties that qualify for low income housing tax credits under
Section 42 of the Internal Revenue Code. Under the loan program, the Company
intended to originate and contract for individual loans of up to $6 million
dollars each over a two-year period in conjunction with American Property
Financing, an unaffiliated third party, which would underwrite and service the
loans for Fannie Mae. The Company guarantees a first loss position of up to
$21.25 million, depending on the aggregate principal amount of the loans the
Company originates under this program and would receive guaranty, loan
origination and other fees. The Company also guarantees construction loans for
which it has issued a forward commitment to originate a loan under the Fannie
Mae program, with respect to which it guarantees repayment of 100% of such
construction loans. As of June 30, 2002, the Company had originated loans
totaling approximately $2.2 million under the Fannie Mae program and has made
forward commitments for an additional approximate $6.8 million. The Company's
maximum guaranty at June 30, 2002 is $9.0 million. The Company has not acquired
an interest in any of the loans the Company originated on Fannie Mae's behalf.
Subsequent to creating this program, the level of loan origination competition
has increased, reducing the Company's projected financing value and
profitability. As a result, the Company decided in the first quarter of 2002 to
discontinue this program. The Company has reached an agreement in principle to
terminate this program and transfer its rights and obligations to a third party.
There can be no assurance, however, that this agreement will happen.
Accordingly, during the first quarter of 2002, the Company wrote off the balance
of unamortized deferred costs relating to this program. This write-off totaled
approximately $358,000 and is included in FNMA loan program expenses in the
Consolidated Statement of Income.
In May of 2002, AMAC guaranteed a construction loan of approximately $7.5
million for Creekside Apartments, a proposed 144-unit affordable multifamily
apartment complex located in Colorado Springs, Colorado, in exchange for a
0.375% fee, which will be received at construction completion. The construction
loan guarantee will provide credit support for the period beginning with
construction completion until property stabilization. It is anticipated that
construction will be completed in February 2003 and that the property will reach
stabilization in October 2003. The fee, when received at completion of
construction, will be deferred and amortized over the guarantee period.
15
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
In February of 2002, AMAC issued a standby bridge loan commitment of $400,000
for the rehabilitation of Valley View and Summertree Apartments, two apartment
complexes featuring 240 total units and located in North Little, Arkansas. The
loan, if funded, will bear interest at 12%. Funding, should it be needed, is not
anticipated to occur until later in 2002. AMAC received a fee of 2.5% for
issuing the commitment. The first mortgage is held by Charter Municipal Mortgage
Acceptance Company ("Charter Mac"), an affiliate of the Advisor.
In June of 2002, AMAC issued a standby bridge loan commitment of $1.4 million
for the construction of Willow Creek Apartments, a 104-unit multi-family
apartment complex located in North Port, Florida. The loan, if funded, will bear
interest at a rate of 12%. Funding, should it be needed, is not anticipated to
occur until December 2003, at the earliest. AMAC received a fee of 3.57% for
issuing the commitment. The first mortgage is held by Charter Mac, an affiliate
of the Advisor.
In June of 2002, AMAC issued a standby bridge loan commitment of $400,000 for
the rehabilitation of McMullen Square Apartments, a 100-unit complex featuring
18 two-story buildings and two one-story buildings, located in San Antonio,
Texas. The loan, if funded, will bear interest at a rate of 12%. Funding, should
it be needed, is not anticipated to occur until February 2003. AMAC received a
fee of 2.5% for issuing the commitment.
Fees received for a commitment to originate a loan are deferred and, if the
commitment is exercised, recognized over the life of the loan as an adjustment
of yield or, if the commitment expires unexercised, recognized in other income
upon expiration of the commitment. If, however, based on the Company's
experience with similar arrangements, management believes that the likelihood
that the commitment will be exercised is remote, the commitment fee is
recognized over the commitment period on a straight-line basis in other income.
Note 9 - Investment in Unconsolidated Subsidiary and Note Receivable
As discussed in Note 8, the Company has entered into an agreement with Fannie
Mae whereby the Company would provide first loss protection on certain loans
funded by Fannie Mae pursuant to a Master Financing and Loss Sharing Agreement.
Through a consolidated subsidiary, AMAC/FM Corporation ("AMAC/FM"), and pursuant
to a Guaranty and Security Agreement with Fannie Mae, the payment of the
Company's obligations under this program is guaranteed and secured by AMAC/FM's
pledge and grant to Fannie Mae of a security interest on certain assets of
AMAC/FM.
16
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
AMAC/FM was capitalized by a contribution by the Company to AMAC/FM of the
mortgage loan secured by Stony Brook Village II Apartments with a principal
amount of $8,404,092. This contribution was recorded by AMAC/FM as a $7,264,092
loan from the Company via a subordinated promissory note, with a stated interest
rate of 7.75% and a $1,140,000 capital contribution through the issuance of
AMAC/FM non-voting common stock. During 2000, the Company accounted for its
$1,140,000 investment in AMAC/FM under the equity method of accounting, because
all of AMAC/FM's voting common shares were held by the Advisor and, therefore,
the Company did not control AMAC/FM.
During January 2001, all of the voting common stock of AMAC/FM, previously owned
by the Advisor, was purchased by the Company, the effect of which is to make
AMAC/FM a wholly-owned, consolidated subsidiary of the Company. This change was
implemented as a result of the REIT Modernization Act of 1999, which allows
REITs to directly own taxable REIT subsidiaries, beginning after the year 2000.
Note 10 - Shareholders' Equity
On February 25, 2002, the Company completed issuance of 2,525,000 common shares,
raising net proceeds of approximately $31 million. The common shares were
offered through Friedman, Billings, Ramsey and RBC Capital Markets. The proceeds
were used to invest primarily in GNMA Certificates.
Note 11 - Subsequent Events
On July 26, 2002, the Company funded the first advance of $7.7 million to
Ellington Plaza. The Company purchased this GNMA Construction Loan certificate
in May, 2002. The stated interest rate is 7.085% and the certificate matures in
July, 2042.
In July of 2002, the Company granted a standby bridge loan commitment to a third
party in the amount of approximately $1.7 million. The purpose of the bridge
loan, which is not expected to be funded until February 2003, is to fund the
final construction draws on the rehabilitation of a 160-unit affordable
multifamily apartment complex located in Laredo, TX, known as Clark's Crossing
Apartments. The bridge loan carries an interest rate of 12%. In conjunction with
the bridge loan, the Company has also guaranteed a construction loan of
approximately $4.8 million, providing credit support for the period beginning
with construction completion until the property reaches stabilization, for which
the Company will receive a fee. Rehabilitation is expected to be completed in
April 2003 and stabilization achieved in September 2003. The Company will
receive a bridge loan origination fee of 2% and a construction loan guarantee
fee of 0.625%.
In August of 2002, the Company issued a standby permanent loan commitment of up
to approximately $4.3 million, for the rehabilitation of Highland Park
Apartments, a 200-unit garden style apartment complex located in Topeka, Kansas,
for which the Company will receive a loan standby commitment fee. If funded,
which could occur in December 2003, the Company would receive interest of 9.5%.
The Company will receive a loan standby commitment fee of 2.00% and, if funded,
a loan origination fee of 1.00%.
On July 31, 2002, the Rancho Verde bridge loan was repaid in full.
17
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2002
(Unaudited)
In August 2002, a distribution of $2,386,361, ($0.375 per share) which was
declared in June 2002, was paid to shareholders for the quarter ended June 30,
2002.
On August 8, 2002, the Company announced that effective September 3, 2002,
Stuart Rothstein will become the Chief Financial Officer and Executive Vice
President of the Company. Mr. Rothstein joins the Company with approximately 11
years of professional experience, including seven years of direct experience
with Spieker Properties, a San Francisco-based office REIT. On September 3,
2002, Alan Hirmes will step down from the position of interim Chief Financial
Officer, but will continue in his position of Executive Vice President and
Director of the Company.
18
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
-------------------------------
Effective April 26, 1999, upon authorization by the Board of Trustees, the
Company's name was changed from American Mortgage Investors Trust to American
Mortgage Acceptance Company. The Company's shares of beneficial interest
commenced trading on the American Stock Exchange on July 1, 1999 under the
symbol "AMC". As of June 30, 2002, there were 6,363,630 shares outstanding.
The Company's business plan focuses on government insured and uninsured
mortgages secured by multifamily properties, which may take the form of
government insured first mortgages and uninsured mezzanine loans, construction
loans and bridge loans. Additionally, the Company has indirectly invested in
subordinate commercial mortgage-backed securities and may invest in other real
estate assets, including non-multifamily mortgages.
As of June 30, 2002, the Company's mortgage investments consisted of two
mortgage loans and seven mezzanine loans originated by or on behalf of the
Company, eleven GNMA mortgage-backed securities and pass-through certificates
(including Ellington Plaza which did not receive its initial advance until July
2002) eight bridge loans and a preferred equity investment in ARCap Investors,
L.L.C. ("ARCap").
In February of 2002, the Company completed an offering of 2,525,000 common
shares at $13.50 per share, raising net proceeds of approximately $31 million.
These proceeds were used primarily to invest in GNMA Certificates. The Company
anticipates using these GNMA Certificates as collateral for future financing
which will be used to make additional investments.
During the six months ended June 30, 2002, cash and cash equivalents increased
approximately $10 million primarily due to net proceeds from the common share
offering, approximately $31 million, proceeds from repurchase facilities
payable, approximately $17.8 million and cash provided by operating activities,
approximately $3 million, offset by investments in mortgage loans, approximately
$2.2 million, investments in GNMA Certificates, approximately $28.1 million,
increase in notes receivable, approximately $8.2 million and distributions to
shareholders, approximately $4.7 million.
The yield on the GNMA Certificates will depend, in part, upon the rate and
timing of principal prepayments on the underlying mortgages. Generally, as
market interest rates decrease, mortgage prepayment rates increase and the
market value of interest rate sensitive obligations like the GNMA Certificates
increases. As market interest rates increase, mortgage prepayment rates tend to
decrease and the market value of interest rate sensitive obligations like the
GNMAs tends to decrease. The effect of prepayments on yield is greater the
earlier a prepayment of principal is received. The Company's GNMAs are
collateralized by mortgage loans on multifamily properties.
The yield on the mortgage loans will depend, in part, on when, and if, the
Company disposes of the mortgage loans prior to maturity or the obligor fully
repays the outstanding debt. The effect of prepayments on yield is greater the
earlier a prepayment of principal is received. Due to the uncertainty of future
economic and other factors that affect interest rates and mortgage prepayments,
it is not possible to predict the effects of future events upon the yield to
maturity or the market value of the mortgage loans upon any sale or other
disposition or whether the Company, if it chose to, would be able to reinvest
proceeds from prepayments at favorable rates relative to the current mortgage
loan rates.
19
The yield on the mezzanine loans is based on a fixed percentage of the
associated first mortgage loan, plus a percentage of the available cash flow
produced by the underlying multifamily property, and a participation in sale or
refinancing proceeds. The yield will vary based on the operating results of the
underlying property, its requirements for capital improvements, and the ability
of the property owners to successfully sell or refinance the underlying
property.
The yield on the bridge loans will depend, in part, on when, and if, the Company
disposes of the loans prior to maturity or the obligor repays the outstanding
debt. These loans are typically of shorter term, about 12 months, and higher
risk. However, the Company's bridge loans are collateralized by the equity
interests of the property owner. Although the loans bear a fixed rate of
interest, the shorter term somewhat reduces the Company's interest rate risk.
The Company's equity in the earnings of ARCap will generally be equal to the
Company's preferred equity dividend rate of 12%, unless ARCap does not have
earnings and cash flows adequate to meet this dividend requirement. ARCap's
investment portfolio consists of subordinated commercial mortgage backed
securities, whose yields depend, among other things, on the rate and timing of
principal payments, the pass through rate, interest rate fluctuations and
defaults on the underlying mortgages. The Company's investment in ARCap is
illiquid and its carrying amount is not necessarily representative of the amount
the Company would receive upon a sale of this investment.
The Company finances the acquisition of its assets primarily through borrowing
at short-term rates using demand repurchase agreements. Under the Company's
declaration of trust, the Company may incur permanent indebtedness of up to 50%
of total market value calculated at the time the debt is incurred. Permanent
indebtedness and working capital indebtedness may not exceed 100% of the
Company's total market value. In February of 2002, the Company sold 2.5 million
common shares at a price of $13.50 per share, raising net proceeds of
approximately $31 million. If market conditions warrant, the Company may seek to
raise additional funds for investment through further common offerings in the
future, although the timing and amount of such offerings cannot be determined at
this time.
Effective February 15, 2000, the Company entered into a repurchase facility with
Nomura Securities International Inc. This agreement enables the Company to
borrow up to 95% of the fair market value of qualified mortgage securities owned
by the Company which are pledged as collateral for the borrowings. Borrowings
bear interest at LIBOR plus 0.50%. As of June 30, 2002 and December 31, 2001,
the amount outstanding under this facility was $61,451,000 and $43,610,000 and
interest rates were 1.89% and 2.58%, respectively. All borrowings under this
facility have 30-day settlement terms. The Company has not experienced any
problems when renewing its borrowing and management believes it will be able to
continue to renew its borrowings when due. If the Company were unable to renew
such borrowings with Nomura, it would have to either find replacement financing
or sell assets at prices which may be below market value.
In order to qualify as a REIT under the Code, the Company must, among other
things, distribute at least 90% of its taxable income. The Company believes that
it is in compliance with the REIT-related provisions of the Code.
The Company expects that cash generated from the Company's investments will meet
its needs for short-term liquidity, and will be sufficient to pay all of the
Company's expenses and to make distributions to its shareholders in amounts
sufficient to retain the Company's REIT status in the foreseeable future.
20
The Company completed a loan program with Fannie Mae which has agreed to fully
fund the origination of $250 million of Delegated Underwriter and Servicer loans
for apartment properties that qualify for low income housing tax credits under
Section 42 of the Internal Revenue Code. Under the loan program, the Company
will originate and contract for individual loans of up to $6 million dollars
each over a two-year period and will work with American Property Financing, an
unaffiliated third party, which will underwrite and service the loans for Fannie
Mae. The Company guarantees a first loss position of up to $21.25 million,
depending on the aggregate principal amount of the loans the Company originates
under this program and will receive guaranty, loan origination and other fees.
The Company also guarantees construction loans for which it has issued a forward
commitment to originate a loan under the Fannie Mae program, with respect to
which it guarantees repayment of 100% of such construction loans. As of June 30,
2002, the Company had originated loans totaling approximately $2.2 million under
the Fannie Mae program and has made forward commitments for an additional
approximate $6.8 million. The Company's maximum guaranty at June 30, 2002 is
$9.0 million.
Since the Company entered into the Fannie Mae loan program, the level of loan
origination competition has increased, reducing the projected financing volume
and profitability. As a result, the Company decided in the first quarter of 2002
to discontinue this program. The Company has reached an agreement in principle
to terminate this program and transfer its rights and obligations to a third
party. There can be no assurance, however, that this agreement will happen.
In August 2002, a distribution of $2,386,361 ($0.375 per share), which was
declared in June 2002, was paid to the shareholders for the quarter ended June
30, 2002.
Management is not aware of any trends or events, commitments or uncertainties,
which have not otherwise been disclosed that will or are likely to impact
liquidity in a material way.
Results of Operations
---------------------
The net income for the three and six months ended June 30, 2002 and 2001 was
$2,458,410 and $1,424,029 and $4,597,434 and $2,555,177, respectively. The total
of the annual operating expenses of the Company may not exceed the greater of
(i) 2% of the Average Invested Assets of the Company or (ii) 25% of the
Company's net income, unless such excess is approved by the Independent
Trustees. On an annualized basis, there was no such excess for the six months
ended June 30, 2002 and 2001.
Interest income from mortgage loans decreased approximately $410,000 and
$897,000 for the three and six months ended June 30, 2002 as compared to 2001
primarily due to the conversion of Hollows, Elmhurst Village and Autumn Creek
mortgages to GNMA Certificates and the sale of the Columbiana mortgage during
2001.
Interest income from GNMA certificates increased approximately $991,000 and
$1,960,000 for the three and six months ended June 30, 2002 as compared to 2001,
primarily due to the conversion of three mortgage loans to GNMA certificates in
2001 and the purchase of an additional five GNMA Certificates in 2002, offset by
the loss of interest income from the Hollows GNMA Certificate which was sold in
March of 2002.
Interest income from notes receivable increased approximately $566,000 and
$1,007,000 for the three and six months ended June 30, 2002 as compared to 2001
due to the addition of eight notes receivable during 2001 and 2002.
During the six months ended June 30, 2002, the Company recognized approximately
$358,000 in FNMA loan program expenses associated with the write-off of the
unamortized deferred costs related to the FNMA loan program.
21
Fees to advisor increased approximately $193,000 and $432,000 for the three and
six months ended June 30, 2002 as compared to 2001 primarily due to an increase
in the Company's assets and an increase in the reimbursements of certain
administrative and other costs incurred by the Advisor on behalf of the Company.
Amortization decreased approximately $11,000 and $24,000 for the three and six
months ended June 30, 2002 due to the deferred costs relating to the Nomura
repurchase facility being fully amortized during 2001.
A gain on the repayment of GNMAs and mortgage loans in the amount of
approximately $614,000 was recorded for the six months ended June 30, 2002,
relating to the sale of the Hollows GNMA on March 25, 2002.
Distributions
-------------
Of the total distributions of $4,693,177 and $2,783,007 for the six months ended
June 30, 2002 and 2001, respectively, $95,743 ($.02 per share or 2.04%) and
$227,830 ($.06 per share or 8.19%), respectively, represented a return of
capital determined in accordance with generally accepted accounting principles.
As of June 30, 2002, the aggregate amount of the distributions made since the
commencement of the initial public offering representing a return of capital, in
accordance with generally accepted accounting principles, totaled $14,592,422.
The portion of the distributions which constituted a return of capital was
significant during the initial acquisition stage in order to maintain level
distributions to shareholders.
Forward-Looking Statements
--------------------------
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include statements regarding the intent, belief or
current expectations of the Company and its management and involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following: general economic and business conditions, which will, among other
things, affect the availability and creditworthiness of prospective tenants,
lease rents and the terms and availability of financing; adverse changes in the
real estate markets including, among other things, competition with other
companies; risks of real estate development and acquisition; governmental
actions and initiatives; and environment/safety requirements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof.
Inflation
---------
Inflation did not have a material effect on the Company's results for the
periods presented.
Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Market risk is the exposure to loss resulting from changes in interest rates,
foreign currency exchange rates, commodity prices and equity prices. The primary
market risk to which the investments of the Company is exposed is interest rate
risk, which is highly sensitive to many factors, including governmental monetary
and tax policies, domestic and international economic and political
considerations and other factors beyond the control of the Company.
22
The Company's borrowings under repurchase agreements bear interest at rates that
fluctuate with LIBOR. Based on the $61.5 million of borrowings outstanding under
these facilities at June 30, 2002, a 1% change in LIBOR would impact the
Company's net income by approximately $615,000.
Cash flows and income from the Company's other financial instruments, consisting
primarily of mortgage loans, a preferred equity interest, GNMA certificates, and
cash and cash equivalents, would not be significantly affected by changes in
interest rates, because most of these instruments bear interest at fixed rates,
and are not subject to financing or hedged. Cash and cash equivalents and the
mortgage loans are carried at amortized cost, and so their carrying values are
not impacted by changes in interest rates. The GNMA investments are adjusted to
market value through comprehensive income in shareholders' equity, but changes
in their value have not historically been significant to shareholders' equity.
The preferred equity interest is carried on the equity method; although changes
in interest rates would not directly impact the carrying value of this asset,
they might adversely affect the ability of the underlying entity to meet its
preferred distribution requirements.
23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any material pending legal proceedings.
Item 2. Changes in Securities - None.
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
A proxy and proxy statement soliciting the vote of the Company's
shareholders for the Company's annual meeting of shareholders was sent to
shareholders on or about April 30, 2002. Such meeting was held on June 11, 2002.
Stuart Boesky, Peter Allen, Arthur Fisch, Alan Hirmes and Scott Mannes were
re-elected trustees for a one-year term. The five individuals elected, and the
number of votes cast for and abstaining, with respect to each of them, is as
follows:
For Abstain
--------- -------
Alan P. Hirmes 5,913,798 147,295
Stuart J. Boesky 5,913,978 147,115
Peter T. Allen 6,021,063 40,030
Arthur P. Fisch 6,021,063 40,030
Scott M. Mannes 6,020,243 40,850
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
Exhibits
99.1 Chief Executive Officer certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
99.2 Chief Financial Officer certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Form 8-K - None.
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN MORTGAGE ACCEPTANCE COMPANY
(Registrant)
Date: August 14, 2002 By: /s/ Stuart J. Boesky
--------------------
Stuart J. Boesky
Trustee, Chairman of the Board,
President and Chief Executive
Officer
Date: August 14, 2002 By: /s/ Alan Hirmes
---------------
Alan Hirmes
Chief Financial Officer
Exhibit 99.1
CERTIFICATION PURSUANT TO
18.U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of American Mortgage Acceptance Company
(the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Stuart J. Boesky, Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Stuart J. Boesky
Stuart J. Boesky
Chief Executive Officer
August 14, 2002
Exhibit 99.2
CERTIFICATION PURSUANT TO
18.U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of American Mortgage Acceptance Company
(the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Alan Hirmes, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Alan Hirmes
Alan Hirmes
Chief Financial Officer
August 14, 2002