UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
October 16, 2003
(Date of Report (Date of Earliest Event Reported))
MUNICIPAL MORTGAGE & EQUITY, LLC
(Exact Name of Registrant as Specified in Its Charter)
Delaware 011-11981 52-1449733
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
218 North Charles Street, Suite 500, 21201
Baltimore, Maryland
(Address of Principal Executive Offices) (Zip Code)
(443) 263-2900
(Registrant's Telephone Number, including Area Code)
Item 9. Regulation FD Disclosure.
The information contained in this filing is furnished pursuant to Item 9,
"Regulation FD Disclosure," and Item 12, "Results of Operations and Financial
Condition."
Item 12. Results of Operations and Financial Condition.
On October 16, 2003, Municipal Mortgage & Equity, LLC (the "Company"),
distributed an earnings package to Analysts relating to the Company's financial
performance for the quarter ended September 30, 2003. A copy of the package,
dated September 30, 2003, is attached hereto as Exhibit 99.1.
On October 16, 2003, the Company distributed an earnings press release and
financial statements relating to the Company's financial performance for the
quarter ended September 30, 2003. A copy of the press release, dated October 16,
2003, and financial statements, dated September 30, 2003, is attached hereto as
Exhibit 99.2.
On October 16, 2003, the Company distributed a production press release
relating to the Company's production volume for the quarter ended September 30,
2003. A copy of the press release, dated October 16, 2003, is attached hereto as
Exhibit 99.3.
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.
MUNICIPAL MORTGAGE & EQUITY, LLC
Date: October 16, 2003 By: /s/ William S. Harrison
--------------------------------------
Name: William S. Harrison
Title: SVP and Chief Financial Officer
Exhibit 99.1
------------
MUNICIPAL MORTGAGE & EQUITY, LLC
EARNINGS PACKAGE
QUARTER ENDED SEPTEMBER 30, 2003
TABLE OF CONTENTS
GAAP Income Statement for the three and
nine months ended September 30, 2003 Page 6
Variance Analysis for GAAP Page 7
Rolling Five Quarters - GAAP Page 8
Calculation of Diluted Earnings Per Share Page 9
GAAP Net Income to CAD reconciliation for the Rolling Five Quarters Page 10
CAD Statement for the three and nine months ended September 30, 2003 Page 12
Variance Analysis for CAD Page 14
Rolling Five Quarters - CAD Page 15
Condensed Balance Sheets and Book Value Per Share Page 17
Analysis of Consolidated Balance Sheet Components Page 18
Summary of 3rd Quarter 2003 Investment Activity Page 22
Participating Portfolio Property Net Operating Income Trends Page 23
Units and Average Rents for Bond Portfolio Page 24
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
For the three months ended For the nine months ended
September 30, September 30,
----------------------------- -----------------------------
2003 2002 2003 2002
-------------- ------------- ------------- --------------
INCOME:
Interest income
Interest on bonds and residual interests in bond
securitizations $ 15,612 $ 15,409 $ 45,526 $ 45,970
Interest on loans 9,408 8,676 26,474 25,700
Interest on short-term investments 308 260 832 991
-------------- ------------- ------------- --------------
Total interest income 25,328 24,345 72,832 72,661
-------------- ------------- ------------- --------------
Fee income
Syndication fees 5,764 767 9,000 4,765
Origination fees 862 2,014 3,779 4,608
Loan servicing fees 1,716 1,544 5,463 5,112
Asset management and advisory fees 3,191 969 5,465 2,876
Other income 3,582 900 9,088 3,304
-------------- ------------- ------------- --------------
Total fee income 15,115 6,194 32,795 20,665
-------------- ------------- ------------- --------------
Net gain on sales 8,288 657 11,019 3,526
-------------- ------------- ------------- --------------
Total income 48,731 31,196 116,646 96,852
-------------- ------------- ------------- --------------
EXPENSES:
Interest expense (Note 1) 15,690 8,771 34,782 26,230
Salaries and benefits 12,065 5,446 26,702 16,203
General and administrative 3,385 1,756 7,013 5,179
Professional fees 1,105 884 2,971 3,488
Amortization of intangibles 2,863 334 3,666 985
-------------- ------------- ------------- --------------
Total expenses 35,108 17,191 75,134 52,085
-------------- ------------- ------------- --------------
Net holding gains (losses) on derivatives 3,498 (9,921) 3,922 (14,530)
Impairments and valuation allowances related to investments - - (1,144) (110)
Net losses from equity investments in partnerships (1,608) (1,488) (3,961) (1,717)
Income tax benefit (expense) 2,622 635 3,094 (1,224)
Income allocable to preferred shareholders in a subsidiary
company (Note 1) - (2,994) (5,989) (8,983)
-------------- ------------- ------------- --------------
Net income from continuing operations 18,135 237 37,434 18,203
Discontinued operations - - 25,748 -
-------------- ------------- ------------- --------------
Net income $ 18,135 $ 237 $ 63,182 $ 18,203
============== ============= ============= ==============
Net income allocated to:
Term growth shares - - - 153
-------------- ------------- ------------- --------------
Common shares $ 18,135 $ 237 $ 63,182 $ 18,050
============== ============= ============= ==============
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Net income from continuing operations $ 0.63 $ 0.01 $ 1.32 $ 0.73
Discontinued operations - - 0.91 -
-------------- ------------- ------------- --------------
Basic earnings per common share $ 0.63 $ 0.01 $ 2.23 $ 0.73
============== ============= ============= ==============
Weighted average common shares outstanding 28,842,447 25,329,103 28,353,040 24,728,414
Diluted earnings per common share:
Net income from continuing operations $ 0.62 $ 0.01 $ 1.30 $ 0.71
Discontinued operations - - 0.90 -
-------------- ------------- ------------- --------------
Diluted earnings per common share $ 0.62 $ 0.01 $ 2.20 $ 0.71
============== ============= ============= ==============
Weighted average common shares outstanding 29,224,605 25,916,151 28,711,892 25,323,789
Note 1: As the result of adopting Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("FAS 150"), as of July 1, 2003 the Company was required to reclassify its
preferred shareholders' equity of $160.5 million, recording the $168.0
million redemption obligation as a liability and the $7.5 million of
preferred equity issue costs as an asset, to be amortized until the
redemption dates, on the consolidated balance sheets. In addition, amounts
previously classified as distributions paid to the preferred shareholders
have been recorded as interest expense starting in the third quarter of
2003.
VARIANCE ANALYSIS FOR GAAP
3rd Quarter 2003 Compared to 3rd Quarter 2002:
GAAP net income for the third quarter of 2003 increased $17.9 million over the
same period last year due primarily to the following changes:
(1) a $13.4 million increase in the fair value of derivatives
(2) a $4.0 million contribution in net income from HCI consisting primarily
of the following components:
(i) $4.9 million in syndication fees;
(ii) $3.6 million in net income from the consolidated guaranteed tax
credit equity funds;
(iii) $2.0 million in asset management fees;
(iv) $1.5 million in other income composed primarily of:
a. $0.7 million of guarantee fee income received from the tax
credit equity funds;
b. $0.5 million of contingent general partner fees received from
tax credit equity funds; and
c. $0.2 million in fees received for investment valuation
services; offset in part by
(v) $4.7 million in salaries and benefits;
(vi) $2.5 million in amortization of intangibles;
(vii) $0.8 million in rent expense, professional fees and general and
administrative costs;
(3) a $3.2 million increase in gain on sales associated with the sale of
tax-exempt bonds and loans;
(4) a $2.0 million increase in income tax benefit;
(5) a $1.6 million increase in income from the equity investment in
CAPREIT;
Offset in part by:
(6) $1.9 million in interest expense and amortization of debt issue costs
associated with a line of credit used to fund the HCI acquisition;
(7) a $1.9 million increase in non-HCI-related salaries and benefits
resulting primarily from a $0.8 million increase in salaries and other
compensation and a $1.0 million increase in bonus expense;
(8) a $1.2 million decrease in origination fees;
(9) a $1.0 million decrease in net interest income; and
(10) $0.4 million of integration costs associated with the HCI acquisition.
Year-to-Date 2003 Compared to Year-to-Date 2002:
GAAP net income for the nine months ended September 30, 2003 increased $45.1
million over the same period last year due primarily to the following changes:
(1) $25.7 million in discontinued operations resulting from the sale of a
property that was previously held by the Company;
(2) an $18.5 million increase in the fair value of derivatives;
(3) a $4.3 million increase in income tax benefit;
(4) a $4.0 million contribution in net income from HCI, as described in the
third quarter summary immediately above;
(5) a $3.2 million increase in non-HCI-related other income due primarily
to:
(i) $1.7 million in prepayment fees collected from the early payment
of tax-exempt bond investments;
(ii) $1.6 million in fees collected on a conventional equity deal;
(iii) $0.8 million collected as the result of a collateral release
after the sale of a property;
(iv) $0.3 million of amortization of a guarantee fee received in Q4 of
2002
(v) $0.3 million of income collected on a new put; offset by
(vi) a $1.4 million decrease in commission income;
(6) a $3.0 million increase in gain on sales associated with the sale of
tax-exempt bonds and loans;
Offset in part by:
(7) a $5.8 million increase in non-HCI-related salaries and benefits
resulting primarily from a $1.9 million increase in salaries and other
compensation and a $3.9 million increase in bonus expense;
(8) a $3.5 million decrease in net interest income;
(9) $1.9 million in interest expense and amortization of debt issue costs
associated with a line of credit used to fund the HCI acquisition;
(10) a $1.0 million increase in impairments and valuation allowances
related to investments;
(11) a $0.8 million increase in net losses from equity investments in
partnerships; and
(12) a $0.7 million decrease in non-HCI-related syndication fees due to a
decrease in the volume of syndications closed combined with taking $0.5
million in organizational and offering cost reimbursements related to
closed syndicated tax credit equity funds into income during the first
quarter of 2002, whereas no such fees were recognized during 2003.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
09/30/03 06/30/03 03/31/03 12/31/02 09/30/02
--------------- --------------- --------------- --------------- ---------------
INCOME:
Interest income
Interest on bonds and residual interests in
bond securitizations $ 15,612 $ 13,929 $ 15,985 $ 13,953 $ 15,409
Interest on loans 9,408 7,563 9,503 9,195 8,676
Interest on short-term investments 308 332 192 264 260
--------------- --------------- --------------- --------------- ---------------
Total interest income 25,328 21,824 25,680 23,412 24,345
--------------- --------------- --------------- --------------- ---------------
Fee income
Syndication fees 5,764 1,825 1,411 2,456 767
Origination fees 862 2,219 698 2,023 2,014
Loan servicing fees 1,716 1,838 1,909 1,711 1,544
Asset management and advisory fees 3,191 1,198 1,076 1,011 969
Other income 3,582 3,309 2,197 1,132 900
--------------- --------------- --------------- --------------- ---------------
Total fee income 15,115 10,389 7,291 8,333 6,194
--------------- --------------- --------------- --------------- ---------------
Net gain on sales 8,288 1,453 1,278 5,032 657
--------------- --------------- --------------- --------------- ---------------
Total income 48,731 33,666 34,249 36,777 31,196
--------------- --------------- --------------- --------------- ---------------
EXPENSES:
Interest expense (Note 1) 15,690 8,724 10,368 10,366 8,771
Salaries and benefits 12,065 8,671 5,966 6,475 5,446
General and administrative 3,385 1,972 1,656 1,841 1,756
Professional fees 1,105 877 989 1,472 884
Amortization of intangibles 2,863 414 389 329 334
--------------- --------------- --------------- --------------- ---------------
Total expenses 35,108 20,658 19,368 20,483 17,191
--------------- --------------- --------------- --------------- ---------------
Net holding gains (losses) on derivatives 3,498 (2,449) 2,873 (333) (9,921)
Impairments and valuation allowances related
to investments - (1,144) - (620) -
Net losses from equity investments in partnerships (1,608) (1,606) (747) (1,341) (1,488)
Income tax benefit (expense) 2,622 540 (68) (260) 635
Income allocable to preferred shareholders in a
subsidiary company (Note 1) - (2,995) (2,994) (2,994) (2,994)
--------------- --------------- --------------- --------------- ---------------
Net income from continuing operations 18,135 5,354 13,945 10,746 237
Discontinued operations - 25,748 - - -
--------------- --------------- --------------- --------------- ---------------
Net income $ 18,135 $ 31,102 $ 13,945 $ 10,746 $ 237
=============== =============== =============== =============== ===============
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Net income from continuing operations $ 0.63 $ 0.19 $ 0.51 $ 0.42 $ 0.01
Discontinued operations - 0.89 - - -
--------------- --------------- --------------- --------------- ---------------
Basic earnings per common share $ 0.63 $ 1.08 $ 0.51 $ 0.42 $ 0.01
=============== =============== =============== =============== ===============
Weighted average common shares outstanding 28,842,447 28,857,305 27,342,870 25,426,254 25,329,103
Diluted earnings per common share:
Net income from continuing operations $ 0.62 $ 0.18 $ 0.50 $ 0.41 $ 0.01
Discontinued operations - 0.88 - - -
--------------- --------------- --------------- --------------- ---------------
Diluted earnings per common share $ 0.62 $ 1.06 $ 0.50 $ 0.41 $ 0.01
=============== =============== =============== =============== ===============
Weighted average common shares outstanding 29,224,605 29,213,062 27,681,511 25,917,641 25,916,151
Note 1: As the result of adopting Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("FAS 150"), as of July 1, 2003 the Company was required to reclassify its
preferred shareholders' equity of $160.5 million, recording the $168.0
million redemption obligation as a liability and the $7.5 million of
preferred equity issue costs as an asset, to be amortized until the
redemption dates, on the consolidated balance sheets. In addition, amounts
previously classified as distributions paid to the preferred shareholders
have been recorded as interest expense starting in the third quarter of
2003.
Note 2: Certain prior quarter amounts have been reclassified to conform to the
09/30/03 presentation.
Municipal Mortgage & Equity, LLC
Reconciliation of Basic and Diluted EPS
(unaudited)
For the three months ended September 30, 2003 For the three months ended September 30, 2002
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------------------------------------- --------------------------------------------
(in thousands, except share and per share data)
Basic EPS
Net income from continuing operations $ 18,135 $ 0.63 $ 237 $ 0.01
Discontinued operations - - - -
------------ ----------- ----------- ------------
Income allocable to common shares $ 18,135 28,842,447 $ 0.63 $ 237 25,329,103 $ 0.01
============ =========== =========== ============
Effect of Dilutive Securities
Options and deferred shares 382,158 454,193
Earnings contingency - 132,855
--------------- --------------
Diluted EPS
Net income from continuing operations $ 18,135 $ 0.62 $ 237 $ 0.01
Discontinued operations - - - -
------------ ----------- ------------- ------------
Income allocable to common shares
plus assumed conversions $ 18,135 29,224,605 $ 0.62 $ 237 25,916,151 $ 0.01
============ =============== =========== ============= ============== ============
For the nine months ended September 30, 2003 For the nine months ended September 30, 2002
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------------------------------------- --------------------------------------------
(in thousands, except share and per share data)
Basic EPS
Net income from continuing operations $ 37,434 $ 1.32 $ 18,050 $ 0.73
Discontinued operations 25,748 0.91 - -
------------ ----------- ----------- ------------
Income allocable to common shares $ 63,182 28,353,040 $ 2.23 $ 18,050 24,728,414 $ 0.73
============ =========== ============ ============
Effect of Dilutive Securities
Options and deferred shares 358,852 462,520
Earnings contingency - 132,855
--------------- --------------
Diluted EPS
Net income from continuing operations $ 37,434 $ 1.30 $ 18,050 $ 0.71
Discontinued operations 25,748 0.90 - -
------------ ----------- ----------- ------------
Income allocable to common shares
plus assumed conversions $ 63,182 28,711,892 $ 2.20 $ 18,050 25,323,789 $ 0.71
============ =============== =========== ============= ============== ============
MUNICIPAL MORTGAGE & EQUITY, LLC
RECONCILIATION OF GAAP INCOME TO CASH AVAILABLE FOR DISTRIBUTION
(In thousands)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
INCOME: 09/30/03 06/30/03 03/31/03 12/31/02 09/30/02
------------- ------------- ------------- ------------- ------------
Interest income
Interest on bonds and residual interests in bond
securitizations $ 15,612 $ 13,929 $ 15,985 $ 13,953 $ 15,409
Interest on loans 9,408 7,563 9,503 9,195 8,676
Interest on short-term investments 308 332 192 264 260
------------- ------------- ------------- ------------- ------------
Total interest income 25,328 21,824 25,680 23,412 24,345
------------- ------------- ------------- ------------- ------------
Fee income
Syndication fees 5,764 1,825 1,411 2,456 767
Origination fees 862 2,219 698 2,023 2,014
Loan servicing fees 1,716 1,838 1,909 1,711 1,544
Asset management and advisory fees 3,191 1,198 1,076 1,011 969
Other income 3,582 3,309 2,197 1,132 900
------------- ------------- ------------- ------------- ------------
Total fee income 15,115 10,389 7,291 8,333 6,194
------------- ------------- ------------- ------------- ------------
Net gain on sales 8,288 1,453 1,278 5,032 657
------------- ------------- ------------- ------------- ------------
Total income 48,731 33,666 34,249 36,777 31,196
------------- ------------- ------------- ------------- ------------
EXPENSES:
Interest expense 15,690 8,724 10,368 10,366 8,771
Salaries and benefits 12,065 8,671 5,966 6,475 5,446
General and administrative 3,385 1,972 1,656 1,841 1,756
Professional fees 1,105 877 989 1,472 884
Amortization of intangibles 2,863 414 389 329 334
------------- ------------- ------------- ------------- ------------
Total expenses 35,108 20,658 19,368 20,483 17,191
------------- ------------- ------------- ------------- ------------
Net holding gains (losses) on derivatives 3,498 (2,449) 2,873 (333) (9,921)
Impairments and valuation allowances related to investments - (1,144) - (620) -
Net losses from equity investments in partnerships (1,608) (1,606) (747) (1,341) (1,488)
Income tax benefit (expense) 2,622 540 (68) (260) 635
Income allocable to preferred shareholders in a subsidiary
company - (2,995) (2,994) (2,994) (2,994)
------------- ------------- ------------- ------------- ------------
Net income from continuing operations 18,135 5,354 13,945 10,746 237
Discontinued operations - 25,748 - - -
------------- ------------- ------------- ------------- ------------
Net income $ 18,135 $ 31,102 $ 13,945 $ 10,746 $ 237
============= ============= ============= ============= ============
Conversion to Cash Available for Distribution:
(1)Mark to market adjustments $ (3,498) $ 2,449 $ (2,873) $ 333 $ 9,921
(2)Equity investments 1,995 3,181 2,410 2,837 3,248
(3)Net gain on sales (577) (10,486) (327) (3,395) (450)
(3)Amortization of capitalized mortgage servicing fees 390 414 352 329 334
(3)Amortization of asset management contracts 2,422 - - - -
(4)Origination fees, syndication fees and other
income, net 2,675 1,335 281 1,376 53
(5)Valuation allowances and other-than-temporary
impairments - 1,097 - 620 -
(6)Deferred tax expense (2,622) 984 628 703 (462)
(7)Discontinued operations - (25,748) - - -
(7)Interest income - 10,793 - - -
(8)Fund Income (3,629) - - - -
------------- ------------- ------------- ------------- ------------
Cash Available for Distribution (CAD) $ 15,291 $ 15,121 $ 14,416 $ 13,549 $ 12,881
============= ============= ============= ============= ============
Notes
(1) For GAAP reporting, the Company records the non-cash change in fair value
of its investment in interest rate swaps and other derivative financial
instruments through net income. These non-cash gains and losses are not
included in the Company's calculation of CAD.
(2) For GAAP reporting, the Company accounts for various investments in
partnerships using the equity accounting method. As a result, the Company's
allocable share of the income or loss from the partnerships is reported in
income (losses) from equity investments in partnerships. The income from
these partnerships includes depreciation expense and changes in the fair
value of investments in derivatives. For GAAP reporting, distributions are
treated as a return of capital. For CAD reporting, the Company records the
cash distributions it receives from the partnerships as other income. In
addition, a portion of the income or loss from partnerships is reduced by a
minority interest for both GAAP and CAD.
(3) For GAAP reporting, the Company recognizes non-cash gains and losses and
amortization of intangible assets, including (a) non-cash gains and losses
associated with the sale of assets or capitalization of mortgage servicing
rights; (b) amortization of mortgage servicing rights over the estimated
life of the serviced loans; and (c) amortization of asset management
contracts recorded in connection with a July 2003 acquisition. These
non-cash items are not included in CAD.
(4) This adjustment reflects the net difference, for the relevant period,
between fees reflected in income when received for CAD and the recognition
of fees for GAAP. This line item reflects several types of income:
(a) Origination fees and certain other income amounts, which are
recognized as income when received for CAD purposes, but for GAAP
reporting are amortized over the life of the associated investment.
(b) Syndication fees, which are recognized as income when earned for CAD
purposes, but for GAAP reporting a portion of the fee may be deferred
until investors have paid in greater than 20% of their total capital
contributions to the tax credit funds.
(c) Guarantee fees, which are recognized as income when received for CAD
purposes, but for GAAP reporting are recorded into income over the
guarantee period.
(d) Asset management fees, which are recognized as income when earned and
collectible for CAD purposes, but for GAAP purposes are applied first
to relieve accounts receivable recorded in conjunction with the July
2003 acquisition, and second as income consistent with the CAD revenue
recognition.
(5) For GAAP reporting, the Company records valuation allowances and
other-than-temporary impairments on its investments in loans, bonds and
other bond-related investments. Such non-cash charges do not affect the
cash flow generated from the operation of the underlying properties,
distributions to shareholders, or the tax-exempt status of the income of
the financial obligation under the bonds. Therefore, these items are not
included in the calculation of CAD.
(6) For GAAP reporting, the Company's income tax expense contains both a
current and a deferred component. Only the Company's current income tax
expense is reflected in CAD.
(7) For GAAP reporting, the Company recognized a gain upon the sale of a
property. This gain was required to be classified as discontinued
operations because the Company owned the property prior to the sale. For
CAD reporting, the gain was significantly less due to recording a portion
of the proceeds as interest income. In addition, the carrying value of the
tax-exempt bond associated with the property was significantly more for CAD
due to an impairment previously recognized for GAAP.
(8) For those of the Company's tax credit equity syndication funds in which the
Company provides a guarantee or otherwise has continuing involvement in the
underlying assets of the fund, GAAP accounting requires the Company to
record the net income (loss) from the fund. This non-cash item is not
reflected in CAD.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(Unaudited)
(In thousands, except share and per share data)
For the three months ended For the nine months ended
September 30, September 30,
------------------------------ ---------------------------
2003 2002 2003 2002
-------------- --------------- ------------- ------------
SOURCES OF CASH:
Interest on bonds, residual interests in bond securitizations and
loans $ 24,626 $ 23,331 $ 81,071 $ 69,671
Interest on short-term investments 277 260 801 991
Syndication fees 6,588 767 9,824 4,765
Origination fees 1,887 2,206 5,758 6,719
Loan servicing fees 1,708 1,544 5,452 5,112
Asset management and advisory fees 3,777 969 6,051 2,876
Distributions from equity investments in partnerships 1,946 1,760 5,493 2,050
Other income 2,384 878 8,696 3,462
Net gain (loss) on sales 3,239 207 (4,843) 349
-------------- --------------- ------------- ------------
TOTAL SOURCES OF CASH 46,432 31,922 118,303 95,995
-------------- --------------- ------------- ------------
EXPENSES:
Interest expense 11,920 8,134 29,861 24,324
Interest expense - preferred shares (Note 1) 2,994 - 2,994 -
Salaries and benefits 12,065 5,446 26,702 16,203
Professional fees 1,105 884 2,971 3,488
General and administrative 3,057 1,756 6,995 5,179
Loan loss expense - - 47 -
Income tax expense (benefit) - (173) (2,084) 586
-------------- --------------- ------------- ------------
TOTAL EXPENSES 31,141 16,047 67,486 49,780
-------------- --------------- ------------- ------------
CASH AVAILABLE FOR DISTRIBUTION 15,291 15,875 50,817 46,215
-------------- --------------- ------------- ------------
LESS:
Cash allocable to preferred shareholders and term growth shares,
including preferred shareholders in a subsidiary company (Note 1) - 2,994 5,989 9,136
-------------- --------------- ------------- ------------
CASH AVAILABLE FOR DISTRIBUTION TO COMMON SHARES $ 15,291 $ 12,881 $ 44,828 $ 37,079
============== =============== ============= ============
CAD PER COMMON SHARE $ 0.53 $ 0.51 $ 1.55 $ 1.47
============== =============== ============= ============
COMMON SHARES OUTSTANDING 28,917,912 25,349,585
============== ===============
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 15,291 $ 12,881 $ 44,828 $ 37,079
============== =============== ============= ============
ACTUAL AMOUNT PAID $ 14,643 $ 11,154 $ 40,383 $ 33,194
============== =============== ============= ============
PAYOUT RATIO (Note 2) 95.8% 86.6% 90.1% 89.5%
============== =============== ============= ============
COMMON SHARES OUTSTANDING FOR
DISTRIBUTION (Note 2) 32,540,412 25,349,585
============== ===============
CASH DISTRIBUTION PER COMMON SHARE $ 0.4500 $ 0.4400 $ 1.3425 $ 1.3125
============== =============== ============= ============
Note 1: As the result of adopting Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("FAS 150"), as of July 1, 2003 the Company was required to reclassify its
preferred shareholders' equity of $160.5 million, recording the $168.0
million redemption obligation as a liability and the $7.5 million of
preferred equity issue costs as an asset, to be amortized until the
redemption dates, on the consolidated balance sheets. In addition, amounts
previously classified as distributions paid to the preferred shareholders
have been recorded as interest expense starting in the third quarter of
2003.
Note 2: The payout ratio calculation is based on 32,540,412 common shares
outstanding to reflect the 3,622,500 common shares issued in October 2003
that will also receive the third quarter distribution.
The primary differences between Net Income as calculated under generally
accepted accounting principles ("GAAP") and Cash Available For Distribution
("CAD") result from the timing of income and expense recognition and non-cash
events. These differences between CAD and GAAP income include the treatment of
certain fees, which for CAD purposes are recognized when received but for GAAP
purposes are amortized into income over the relevant period. In addition, there
are differences related to non-cash gains and losses associated with bond
valuations and sales, non-cash gains and losses associated with changes in
market value of derivative financial instruments, amortization of goodwill and
intangibles and capitalization of mortgage servicing rights, which are not
included in the calculation of CAD.
The common shares outstanding reported for Cash Available for Distribution
are the actual shares outstanding at the end of the quarter. For GAAP, the
weighted average shares outstanding during the period are reported for the basic
net income per share calculation. The weighted average shares outstanding for
diluted net income per share include the potential dilutive effect from the
exercise of options, vesting of restricted shares, conversion of the preferred
shares and provision for shares to be awarded under the Midland acquisition earn
out provision.
VARIANCE ANALYSIS FOR CAD
3rd Quarter 2003 Compared to 3rd Quarter 2002:
CAD to common shares for the third quarter of 2003 increased $2.4 million over
the same period last year due primarily to the following changes:
(1) a $4.4 million contribution in income from HCI consisting primarily of
the following components:
(i) $5.8 million in syndication fees;
(ii) $2.6 million in asset management fees;
(iii) $1.5 million in other income composed primarily of:
a. $0.7 million of guarantee fee income received from the tax
credit equity funds;
b. $0.5 million of contingent general partner fees received from
tax credit equity funds; and
c. $0.2 million in fees received for investment valuation
services; offset in part by
(iv) $4.7 million in salaries and benefits; and
(v) $0.8 million in rent expense, professional fees and general and
administrative costs;
(2) a $3.0 million increase in gain on sales associated with the sale of
two tax-exempt bonds and a taxable loan;
Offset in part by:
(3) $1.9 million in interest expense and amortization of debt issue costs
associated with a line of credit used to fund the HCI acquisition;
(4) a $1.9 million increase in non-HCI-related salaries and benefits
resulting primarily from a $0.8 million increase in salaries and other
compensation and a $1.0 million increase in bonus expense;
(5) a $0.6 million decrease in net interest income; and
(6) $0.4 million of integration costs associated with the HCI acquisition.
Year-to-Date 2003 Compared to Year-to-Date 2002:
CAD to common shares for the nine months ended September 30, 2003 increased $7.7
million over the same period last year due primarily to the following changes:
(1) a $7.8 million increase in net interest income due primarily to:
(i) $10.8 million increase in interest income related to the payoff of
a tax-exempt bond on a property that was sold; offset by
(ii) a $3.0 million decrease in interest income from various bonds and
other bond-related investments;
(2) a $4.4 million contribution in income from HCI, as described in the
third quarter summary immediately above;
(3) a $3.7 million increase in non-HCI-related other income due primarily
to:
(i) $1.7 million in prepayment fees collected from the early payment
of tax-exempt bond investments;
(ii) $1.6 million in fees collected on a conventional equity deal;
(iii) $1.0 million of interest collected from a property that was held
by the Company prior to sale to a third party;
(iv) $0.8 million collected as the result of a collateral release
after the sale of a property;
(v) $0.3 million of income collected on a new put; offset by
(vi) a $1.4 million decrease in commission income; and
(vii) a $0.4 million decrease in the collection of loan related fees
such as cancellation, application and extension fees;
(4) a $3.4 million increase in distributions from equity investments in
partnerships due to an increase in income from the CAPREIT investments;
(5) a $2.7 million increase in income tax benefit;
(6) a $0.6 million increase in non-HCI-related asset management and
advisory fees;
Offset in part by:
(7) a $5.8 million increase in non-HCI-related salaries and benefits
resulting primarily from a $1.9 million increase in salaries and other
compensation and a $3.9 million increase in bonus expense;
(8) a $5.2 million decrease in gain on sales due primarily to:
(i) a $10.8 million loss on the termination of interest rate swaps;
(ii) a $2.7 million gain on the sale of two tax-exempt bonds and a
taxable loan;
(iii) a $1.5 million gain recorded on the payoff of the tax-exempt
bond and taxable loan on a property that was sold; and
(iv) a $1.7 million increase in gain on sales related to an increase
in premiums on the delivery of loans to HUD and gain on sale on
delivery of loans to a new conduit lender;
(9) $1.9 million in interest expense and amortization of debt issue costs
associated with a line of credit used to fund the HCI acquisition;
(10) a $1.0 million decrease in origination fees;
(11) a $0.7 million decrease in non-HCI-related syndication fees due to a
decrease in the volume of syndications closed combined with taking $0.5
million in organizational and offering cost reimbursements related to
closed syndicated tax credit equity funds into income during the first
quarter of 2002, whereas no such fees were recognized during 2003; and
(12) a $0.5 million increase in non-HCI-related professional and general
and administrative fees, of which $0.4 million is attributable to HCI
integration costs.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(In thousands, except share and per share data)
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
09/30/03 06/30/03 03/31/03 12/31/02 09/30/02
-------------- ------------- ------------- ------------ -------------
SOURCES OF CASH:
Interest on bonds, residual interests in bond securitizations
and loans $ 24,626 $ 31,597 $ 24,848 $ 22,596 $ 23,331
Interest on short-term investments 277 332 192 264 260
Syndication fees 6,588 1,825 1,411 2,456 767
Origination fees 1,887 2,711 1,160 3,007 2,206
Loan servicing fees 1,708 1,835 1,909 1,711 1,544
Asset management and advisory fees 3,777 1,198 1,076 1,011 969
Distributions from equity investments in partnerships 1,946 1,716 1,831 1,535 1,760
Other income 2,384 4,221 2,091 1,609 878
Net gain (loss) on sales 3,239 (9,033) 951 1,637 207
-------------- ------------- ------------- ------------ -------------
TOTAL SOURCES OF CASH 46,432 36,402 35,469 35,826 31,922
-------------- ------------- ------------- ------------ -------------
EXPENSES:
Interest expense 11,920 8,102 9,839 9,899 8,134
Interest expense - preferred shares (Note 1) 2,994 - - - -
Salaries and benefits 12,065 8,671 5,966 6,475 5,446
Professional fees 1,105 877 989 1,472 884
General and administrative 3,057 2,113 1,825 1,880 1,756
Loan loss expense - 47 - - -
Income tax expense (benefit) - (1,524) (560) (443) (173)
-------------- ------------- ------------- ------------ -------------
TOTAL EXPENSES 31,141 18,286 18,059 19,283 16,047
-------------- ------------- ------------- ------------ -------------
CASH AVAILABLE FOR DISTRIBUTION 15,291 18,116 17,410 16,543 15,875
LESS:
Cash allocable to preferred shareholders of a
subsidiary company (Note 1) - 2,995 2,994 2,994 2,994
-------------- ------------- ------------- ------------ -------------
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 15,291 $ 15,121 $ 14,416 $ 13,549 $ 12,881
============== ============= ============= ============ =============
CAD PER COMMON SHARE $ 0.53 $ 0.52 $ 0.50 $ 0.53 $ 0.51
============== ============= ============= ============ =============
COMMON SHARES OUTSTANDING 28,917,912 28,832,443 28,846,327 25,546,010 25,349,585
============== ============= ============= ============ =============
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 15,291 $ 15,121 $ 14,416 $ 13,549 $ 12,881
============== ============= ============= ============ =============
ACTUAL AMOUNT PAID $ 14,643 $ 12,903 $ 12,837 $ 11,304 $ 11,154
============== ============= ============= ============ =============
PAYOUT RATIO (Note 2) 95.8% 85.3% 89.0% 83.4% 86.6%
============== ============= ============= ============ =============
COMMON SHARES OUTSTANDING FOR
DISTRIBUTION (Note 2) 32,540,512 28,832,443 28,846,327 25,546,010 25,349,585
============== ============= ============= ============ =============
CASH DISTRIBUTION PER COMMON SHARE $ 0.4500 $ 0.4475 $ 0.4450 $ 0.4425 $ 0.4400
============== ============= ============= ============ =============
Note 1: As the result of adopting Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("FAS 150"), as of July 1, 2003 the Company was required to reclassify its
preferred shareholders' equity of $160.5 million, recording the $168.0
million redemption obligation as a liability and the $7.5 million of
preferred equity issue costs as an asset, to be amortized until the
redemption dates, on the consolidated balance sheets. In addition, amounts
previously classified as distributions paid to the preferred shareholders
have been recorded as interest expense starting in the third quarter of
2003.
Note 2: The payout ratio calculation is based on 32,540,412 common shares
outstanding to reflect the 3,622,500 common shares issued in October 2003
that will also receive the third quarter distribution.
Note 3: Certain prior quarter amounts have been reclassified to conform to the
09/30/03 presentation.
CAD differs from net income because of variations between GAAP income and
actual cash received. There are three primary differences between CAD and GAAP
income. The first is the treatment of loan origination fees, which for CAD
purposes are recognized as income when received but for GAAP purposes are
amortized into income over the life of the associated investment. The second
difference is the non-cash gain and loss recognized for GAAP associated with
valuations, sales of investments and capitalization of mortgage servicing
rights, which are not included in the calculation of CAD. The third difference
is the treatment of the Company's investments in partnerships. For GAAP, the
Company records its allocable share of the income (loss) from the partnership as
income, while for CAD reporting, the Company records the cash distributions it
receives from the partnership as income. For a reconciliation of GAAP net income
to CAD, see page 10.
CAD per common share is calculated based on the number of shares
outstanding at the end of each quarter. For GAAP, basic earnings per share is
calculated based on the weighted average shares outstanding during the period.
The weighted average shares outstanding for diluted earnings per share include
the potential dilutive effect from the exercise of options, vesting of
restricted shares, and provision for shares to be awarded under the Midland
acquisition earn out provision.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
September 30, December 31,
2003 2002
------------- ------------
ASSETS:
Investment in tax-exempt bonds and residual interests
in bond securitizations $ 804,276 $ 781,384
Loans receivable, net 472,620 422,299
Loans receivable held for sale 9,118 39,149
Investments in partnerships 233,032 99,966
Investment in derivative financial instruments 2,755 18,762
Cash, cash equivalents and interest receivable 62,268 59,902
Other assets 204,405 97,919
Goodwill and other intangibles 131,422 33,537
------------- ------------
TOTAL $ 1,919,896 $ 1,552,918
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Notes payable $ 609,506 $ 450,924
Short-term debt 191,835 219,945
Long-term debt 155,448 147,357
Preferred shares subject to mandatory redemption (Note 1) 168,000 -
Tax credit syndication guarantee liability 149,305 -
Residual interests in bond securitizations 1,925 1,447
Investment in derivative financial instruments 17,879 49,359
Other liabilities 59,346 36,357
Preferred shareholders' equity in a subsidiary company (Note 1) - 160,465
Shareholders' equity 566,652 487,064
------------- ------------
TOTAL $ 1,919,896 $ 1,552,918
============= ============
BOOK VALUE PER COMMON SHARE $ 19.64 $ 19.07
============= ============
Note 1: As the result of adopting Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("FAS 150"), as of July 1, 2003 the Company was required to reclassify its
preferred shareholders' equity of $160.5 million, recording the $168.0
million redemption obligation as a liability and the $7.5 million of
preferred equity issue costs as an asset, to be amortized until the
redemption dates, on the consolidated balance sheets. In addition, amounts
previously classified as distributions paid to the preferred shareholders
have been recorded as interest expense starting in the third quarter of
2003.
Municipal Mortgage & Equity, LLC
Analysis of Consolidated Balance Sheet Components
The table on pages 19 through 21 provides an overview, organized according to
major categories of invested assets or product types, of the Company's assets
and liabilities as of September 30, 2003. Management believes this presentation
provides helpful detail on the components of the Company's leverage and how the
Company's assets and liabilities relate to those major categories. The table
also provides data on the Company's off-balance-sheet bond securitizations as of
September 30, 2003, in order to permit comparison of the Company's leverage
based on the GAAP balance sheet alone to leverage inclusive of those
off-balance-sheet items. Readers are cautioned that (1) this table does not
reflect formal operating units or business segments within the Company, (2)
shareholder's equity for each of columns A through G was calculated by taking
assets minus liabilities for each column, and the related columnar shareholder
equity figures should not, therefore, be construed as representing the actual or
notional equity supporting the invested assets or product type represented by a
given column, (3) various items grouped in column E (Other) relate to other
columns but have been aggregated in column E for ease of presentation and
simplicity (e.g., cash is not allocated among the various columns), and (4) the
preferred equity interest in MuniMae TE Bond Subsidiary, LLC has been presented
in a separate column F to highlight subsidiary preferred shares reclassified as
debt as of July 1, 2003 according to Statement of Financial Standards No. 150,
"Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity."
MUNICIPAL MORTGAGE & EQUITY, LLC
ANALYSIS OF CONSOLIDATED BALANCE SHEET COMPONENTS
9/30/2003
(In thousands, except share data)
(Unaudited)
(A) (B) (C) (D) (E)
Bond Securitizations Taxable Tax Credit CAPREIT Equity
and Derivatives Lending (2) Operations (3) Investments (4) Other
------------------ -------------- -------------- ---------------- ------------
ASSETS
Investment in tax-exempt bonds, net $ 792,332 $ - $ - $ - $ -
Loans receivable, net 26,426 443,672 2,522 -
Loans receivable held for sale 9,118 -
Investments in partnerships 69,931 60,727 (3)
Residual interests in bond securitizations 11,944 -
Investment in derivative financial instruments 2,755 -
Cash and cash equivalents 46,008
Interest receivable 16,260
Restricted assets 12,023 48,622 -
Other assets 24,217 40,997
Mortgage servicing rights, net 10,841 -
Goodwill (7) 17,293 115,722 1,897
------------------ -------------- -------------- ---------------- ------------
Total assets $ 845,480 $ 480,924 $ 209,870 $ 111,871 $ 105,159
================== ============== ============== ================ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 39,129 $ 385,199 $ 185,178 $ - $ -
Short-term debt 191,835 -
Long-term debt 155,448 -
Preferred shares subject to mandatory redemption -
Tax credit syndication guarantee liability -
Residual interests in bond securitizations 1,925 -
Investment in derivative financial instruments 17,879 -
Accounts payable and accrued expenses 12,744
Interest payable 8,657
Unearned revenue and other liabilities 31,515
------------------ -------------- -------------- ---------------- ------------
Total liabilities 406,216 385,199 185,178 - 52,916
------------------ -------------- -------------- ---------------- ------------
Liabilities / Assets 48% (9) 80% 88% 0% 50%
Percentage of liabilities -
balance sheet 9/30/03 30% 28% 14% 0% 4%
Percentage of liabilities -
adjusted balance sheet 9/30/03 25% 23% 11% 0% 3%
Total shareholders' equity (8) 439,264 95,725 24,692 111,871 52,243
------------------ -------------- -------------- ---------------- ------------
Total liabilities and shareholders' equity $ 845,480 $ 480,924 $ 209,870 $ 111,871 $ 105,159
================== ============== ============== ================ ============
MUNICIPAL MORTGAGE & EQUITY, LLC
ANALYSIS OF CONSOLIDATED BALANCE SHEET COMPONENTS
9/30/2003
(In thousands, except share data)
(Unaudited)
(F) (G) (H) (I) (J)
Preferred Tax Credit Off Balance Adjusted
Equity in Guaranteed Balance Sheet Sheet Bond Balance Sheet
TE Bond Sub (5) Funds (6) September 30, 2003 Securitizations September 30, 2003
--------------- ----------- ------------------ ---------------- ------------------
ASSETS
Investment in tax-exempt bonds, net $ - $ - $ 792,332 $ 296,577 $ 1,088,909
Loans receivable, net 472,620 472,620
Loans receivable held for sale 9,118 9,118
Investments in partnerships 102,377 233,032 233,032
Residual interests in bond securitizations 11,944 11,944
Investment in derivative financial instruments 2,755 2,755
Cash and cash equivalents 46,008 46,008
Interest receivable 16,260 16,260
Restricted assets 54,452 115,097 115,097
Other assets 7,228 6,025 78,467 78,467
Mortgage servicing rights, net 10,841 10,841
Goodwill (7) (3,490) 131,422 131,422
-------------- ----------- ----------------- ---------------- ----------------
Total assets $ 7,228 $159,364 $ 1,919,896 $ 296,577 $ 2,216,473
============== =========== ================= ================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ - $ - $ 609,506 $ - $ 609,506
Short-term debt 191,835 192,512 384,347
Long-term debt 155,448 104,065 259,513
Preferred shares subject to mandatory redemption 168,000 168,000 168,000
Tax credit syndication guarantee liability 149,305 149,305 149,305
Residual interests in bond securitizations 1,925 1,925
Investment in derivative financial instruments 17,879 17,879
Accounts payable and accrued expenses 48 12,792 12,792
Interest payable 8,657 8,657
Unearned revenue and other liabilities 6,382 37,897 37,897
-------------- ----------- ----------------- ---------------- ----------------
Total liabilities 168,000 155,735 1,353,244 296,577 1,649,821
-------------- ----------- ----------------- ---------------- ----------------
Liabilities / Assets 2324% 98% 70.5% 100% 74.4%
Percentage of liabilities -
balance sheet 9/30/03 12% 12% 100% N/A N/A
Percentage of liabilities -
adjusted balance sheet 9/30/03 10% 9% N/A 18% 100%
Total shareholders' equity (8) (160,772) 3,629 566,652 - 566,652
-------------- ----------- ----------------- ---------------- ----------------
Total liabilities and shareholders' equity $ 7,228 $159,364 $ 1,919,896 $ 296,577 $ 2,216,473
============== =========== ================= ================ ================
NOTES
(1) Bond securitizations and derivatives includes the Company's investments in
tax-exempt bonds, bond related investments and derivatives and the related
on-balance sheet debt and cash collateral.
(2) Taxable lending includes the Company's construction and permanent loans and
the related borrowings from the Midland Affordable Housing Group Trust, pension
funds and lines of credit.
(3) Tax credit operations includes the Company's investment in properties and
advances to tax credit equity funds and the related borrowings under lines of
credit. This column also includes borrowings under a line of credit used to
finance the July 2003 acquisition of Lend Lease's tax credit operations.
(4) CAPREIT equity investments includes the taxable equity investments in the
CAPREIT joint ventures and the related cash collateral.
(5) Due to Statement of Financial Accounting Standards No. 150, "Accounting for
Certain Financial Instruments with Characteristics of Both Liabilities and
Equity," the preferred shares issued by TE Bond Subsidiary have been
reclassified to debt.
(6) Tax credit guaranteed funds includes assets and liabilities associated with
funds where the Company has provided investors a guarantee or has continuing
involvement with the assets of the funds. All of these assets and liabilities
related to interests in tax credit equity syndications acquired as of July 1,
2003 from Lend Lease.
(7) Goodwill of $33.6 million related to the 1999 purchase of the Midland
Companies has been allocated equally between taxable lending and tax credit
operations. The balance of the intangibles and goodwill relates to the July 2003
acquisition of the Lend Lease tax credit operations.
(8) Shareholders' equity was calculated by taking assets minus liabilities for
each column, and therefore these amounts do not accurately represent the actual
or notional amount of equity attributable to each column.
(9) Including the assets and liabilities from off balance sheet bond
securitizations the percentage would be 62%.
MUNICIPAL MORTGAGE & EQUITY, LLC
2003 INVESTMENTS
THIRD QUARTER
(In thousands)
BOND PRODUCTION: PERMANENT QUARTER YTD
INTEREST BOND AMOUNT PRODUCTION
------------------------------ -------------------------------
PROPERTY CITY STATE RATE CONSTRUCTION PERMANENT CONSTRUCTION PERMANENT
------------------------------- ----------- -------- --------------- --------------- -------------- ----------------- -------------
Bartram Springs Jacksonville FL 6.65% $ - $ 9,530 $ - $ 9,530
Cedar Park Ranch (1) Cedar Park TX 6.80% 10,350 10,350 10,350 10,350
Desert Eagles Estates (2) Glendale AZ 6.80% 12,600 12,600 12,600 12,600
Mesquite Seniors Retirement (1) Mesquite TX 6.80% 11,000 11,000 11,000 11,000
Park at Landmark Alexandria VA 7.85% - 3,000 - 3,000
Savannah Summit (1) Savannah GA 5.63% 5,400 5,400 5,400 5,400
Walnut Grove Homes (3) Clearlake CA 7.05% 4,900 4,900 4,900 4,900
--------------- -------------- ----------------- -------------
44,250 56,780 44,250 56,780
First Quarter Volume 9,350 22,725
Second Quarter Volume 32,860 32,860
--------------- -------------- ----------------- -------------
TOTAL $ 44,250 $ 56,780 $ 86,460 $ 112,365
=============== ============== ================= =============
(1) The Company earned a 1.25% origination fee on this deal.
(2) The Company's initial investment was $1.9 million. The Company earned a
1.25% origination fee on this deal.
(3) The Company's initial investment was $0.6 million. The Company earned a
1.25% origination fee on this deal.
CONSTRUCTION/PERMANENT LENDING, SYNDICATION AND OTHER PRODUCTION:
TOTAL FEES TOTAL FEES
RECOGNIZED RECOGNIZED
QUARTER THIS QUARTER YTD YTD
VOLUME FOR CAD VOLUME FOR CAD
----------------- -------------- --------------------------------
Tax Credit Equity Syndications (Equity Raised) $ 145,080 $ 6,588 $ 219,717 $ 9,824
Tax Credit Acquisition Production $ 95,335 $ - $ 187,092 $ -
Conventional Equity Production $ - $ 25 $ 50,175 $ 1,634
Taxable Construction Loan Production (generating a weighted
average spread of 1.14%) $ 47,984 $ 452 $ 180,562 $ 1,121
Taxable Permanent Loan Production $ 54,411 $ 773 $ 209,983 $ 3,087
Supplemental Loans $ 17,837 $ 24 $ 42,315 $ 377
OTHER INFORMATION:
Balance as of 9/30/03 of Midland Servicing Portfolio
under Management $ 1,143,000 $ 1,044
Balance as of 9/30/03 of Equity Syndication Portfolio
under Management $ 4,993,993 $ 3,433
MUNICIPAL MORTGAGE & EQUITY, LLC
PARTICIPATING BOND PORTFOLIO
NET OPERATING INCOME - TREND
As of September 30, 2003
Q3 2002 Q2 2003 Q3 2003 Q3 '03/ Q3 '03/
Property Actual Actual Actual Q3 '02 Q2 '03
-------- ------- ------- ------- ------- -------
Alban 251,232 247,847 242,148 -3.6% -2.3%
(1) Arlington 0 -42,761 11,817 N/A N/A
Barkley Place 275,391 333,356 313,259 13.8% -6.0%
(1) Barrington at Beach Street (3) 145,125 220,330 186,060 28.2% -15.6%
Cobblestone 166,461 140,885 170,050 2.2% 20.7%
(1) Cool Springs -44,935 -9,721 28,071 N/A N/A
Creekside 293,487 284,987 279,362 -4.8% -2.0%
Crossings 165,207 168,808 188,638 14.2% 11.7%
Gilman Meadows 162,044 137,065 158,146 -2.4% 15.4%
Hamilton Grove 239,304 169,418 243,828 1.9% 43.9%
Jefferson Commons 274,546 348,634 251,781 -8.3% -27.8%
Lakeview 194,191 182,750 185,913 -4.3% 1.7%
Mallard I 32,210 22,500 34,481 7.1% 53.3%
Mallard II 82,325 94,955 95,123 15.5% 0.2%
Montclair 323,886 357,276 334,495 3.3% -6.4%
Newport Village 230,027 154,180 243,840 6.0% 58.2%
Nicollet Ridge 389,747 245,241 431,915 10.8% 76.1%
Palisades Park 249,431 255,158 271,399 8.8% 6.4%
Riverset I 323,286 329,930 324,451 0.4% -1.7%
Riverset II 142,037 120,781 127,876 -10.0% 5.9%
Steeplechase Falls 386,510 358,705 356,055 -7.9% -0.7%
Meadows 148,232 118,878 130,573 -11.9% 9.8%
Timber Ridge 140,917 125,030 111,825 -20.6% -10.6%
Villas at LaRiviera (3) 199,887 209,711 154,143 -22.9% -26.5%
Whispering Lake 297,874 320,720 367,790 23.5% 14.7%
Winter Oaks 288,197 265,093 260,421 -9.6% -1.8%
---------------------------------------- ----------------------
Total 5,356,619 5,159,758 5,503,462 2.7% 6.7%
Same Store Growth 5,256,429 4,991,909 5,277,514 0.4% 5.7%
(1) In Lease-up. Quarterly totals are not included in Same Store Growth
calculations.
(2) In most cases, Q3 2003 uses July and August actuals plus the September
budget.
(3) No budget was available so August actuals were used twice.
Occupancy
-------------------------------------------------
Month Ended Month Ended Month Ended Month Ended
Month/Year Apartment Sept 30, June 30, Sept 30, Sept 30,
Apartment Community Location Acquired Units 2003 2003 2002 2001
------------------- -------- ---------- --------- -------------------------------------------------
Participating Mortgage Bonds:
Alban Place Frederick, MD Sep-86 194 94.3% 91.2% 95.4% 95.4%
Cobblestone San Antonio, TX Aug-99 184 97.8% 95.7% 93.5% 98.9%
Creekside Village Sacramento, CA Nov-87 296 96.3% 98.3% 99.7% 99.7%
Crossings Lithonia, GA Jan-97 200 86.0% 89.5% 94.0% 95.5%
Jefferson Commons San Marcos, TX Dec-00 173 89.0% 85.5% 82.7% 96.5%
Lakeview Miami, FL Sep-87 180 97.2% 98.9% 98.3% 97.8%
Timber Ridge San Antonio, TX Dec-00 168 92.9% 94.0% 98.8% 97.6%
Villas at LaRiviera Sacramento, CA Jun-99 199 88.5% 80.5% 98.0% 96.0%
--------------
Subtotal Participating Mortgage Bonds 1,594
--------------
Mortgage Bonds
Applewood (a.k.a. Paola) Paola, KS Jul-99 48 100.0% 95.8% 95.8% 87.5%
Autumn Oaks/Crest at Thousand Oaks Feb-03 410 85.6% 86.6% N/A N/A
Charter House (2) Lenexa, KS Dec-96 ---- N/A N/A N/A N/A
Cielo Vista El Paso, TX Aug-99 378 95.5% 96.3% 93.7% 91.5%
Country Club Topeka, KS Jul-99 101 85.1% 81.2% 85.1% 89.1%
Delta Village Stockton, CA Jun-99 80 97.5% 97.5% 96.3% 95.0%
Elmbrooke Minnetonka, MN Aug-00 54 100.0% 100.0% 100.0% 100.0%
Florida A&M Tallahassee, FL Feb-00 96 100.0% 57.3% 90.6% 69.8%
Gannon (Dade) (3) Miami, FL Feb-98 575 96.0% 96.3% 97.7% 95.1%
Gannon (St. Louis) St. Louis, MO Feb-98 336 89.0% 93.5% 89.6% 94.0%
Hidden Valley Kansas City, MO Dec-96 82 98.8% 90.2% 92.7% 91.5%
Honey Creek Dallas, TX Mar-99 656 85.1% 89.6% 89.8% 93.3%
Lake Piedmont Indianapolis, IN Apr-98 648 94.3% 92.1% 90.7% 82.9%
Monroe (Oakmont, Towne Oak) Monroe, LA Dec-98 364 96.4% 93.7% 97.0% 99.4%
Mountain View (Willowgreen) Tacoma, WA Nov-86 241 95.4% 94.6% 95.9% 97.5%
Northridge Park II Salinas, CA Aug-87 128 99.2% 99.2% 88.3% 96.9%
Oakbrook Topeka, KS Dec-96 170 78.8% 83.5% 92.4% 99.4%
Oklahoma City (4) Oklahoma City, OK Aug-98 774 93.7% 90.9% 94.0% 89.0%
Orangevale Orange, CA Apr-98 64 96.9% 100.0% 100.0% 100.0%
Parkwood Turlock, CA Jun-99 180 93.9% 97.2% 97.2% 98.9%
Riverset II (1) Memphis, TN Jan-96 ---- N/A N/A N/A N/A
Riverview Fulton County, GA Jun-00 228 96.1% 96.1% 96.9% N/A
Sahuarita Sahuarita, AZ Jun-99 52 69.2% 73.1% 100.0% 71.2%
Santa Fe Springs Phoenix, AZ Jun-00 310 91.9% 78.1% 89.7% 81.6%
Shadowbrook Selma, CA Jun-99 193 99.5% 95.3% 96.9% 97.9%
Silver Springs Kent, WA Dec-99 250 94.0% 92.4% 84.4% 81.6%
Southwind Sacramento, CA Aug-00 88 100.0% 100.0% 100.0% 95.5%
Torries Chase Olathe, KS Dec-96 99 93.9% 91.9% 92.9% 99.0%
Village Apartments Baytown, TX May-00 210 95.2% 95.2% 93.8% 74.3%
Village at Stone Mountain Stone Mountain, GA Oct-97 722 88.0% 84.9% 90.6% 93.5%
Village Green Austin, TX Feb-00 200 92.5% 81.5% 90.5% 94.0%
Weatherstone Rochester, MN Sep-00 100 99.0% 97.0% 96.0% N/A
Western Hills Overland Park, KS Dec-98 80 67.5% 70.0% 97.0% 97.5%
Willow Key Orlando, FL Mar-99 384 92.7% 93.5% 97.7% 99.0%
Woodglen Houston, TX Dec-99 250 86.0% 79.6% 87.2% 77.2%
Woodmark Woodland, CA Jun-99 173 98.8% 97.1% 99.4% 96.0%
--------------
Subtotal Mortgage Bonds 8,724
--------------
Participating Subordinate Mortgage Bonds:
Barkley Place Ft. Myers, FL May-87 156 96.2% 95.5% 92.9% 95.5%
Gilman Meadows Issaquah, WA Mar-87 125 99.2% 93.6% 97.6% 90.4%
Hamilton Chase Chattanooga, TN Feb-87 300 95.7% 92.7% 92.7% 92.7%
Mallard Cove I & II Everett, WA Feb-87 198 94.9% 94.9% 92.4% 91.9%
Meadows Memphis, TN Jan-88 200 92.0% 93.0% 96.5% 94.0%
Montclair Springfield, MO Oct-86 159 95.0% 93.1% 91.2% 95.6%
Newport Village Thornton, CO Dec-86 220 91.8% 84.1% 90.0% 97.7%
Nicollet Ridge Burnsville, MN Dec-87 339 95.0% 90.9% 95.3% 97.6%
Riverset II Memphis, TN Jan-96 148 91.4% 89.0% 94.0% 89.0%
Steeplechase Knoxville, TN Oct-88 450 98.2% 95.1% 95.3% 96.2%
Whispering Lake Kansas City, MO Oct-87 384 91.9% 93.8% 90.6% 92.4%
--------------
Subtotal Participating Subordinate Mortgage Bonds 2,679
--------------
Avg. Monthly Rent
Per Apartment Unit
--------------------------------------------------
Month Month Month Month
Ended Ended Ended Ended
Month/Year Apartment Aug 31, June 30, Sept 30, Sept 30,
Apartment Community Location Acquired Units 2003 2003 2002 2001
------------------- -------- ---------- --------- --------------------------------------------------
Participating Mortgage Bonds:
Alban Place Frederick, MD Sep-86 194 946 943 937 886
Cobblestone San Antonio, TX Aug-99 184 582 589 572 570
Creekside Village Sacramento, CA Nov-87 296 602 596 570 526
Crossings Lithonia, GA Jan-97 200 759 757 744 739
Jefferson Commons San Marcos, TX Dec-00 173 1,241 1,216 1,231 1,322
Lakeview Miami, FL Sep-87 180 722 718 698 669
Timber Ridge San Antonio, TX Dec-00 168 497 468 496 493
Villas at LaRiviera Sacramento, CA Jun-99 199 707 708 700 644
--------------
Subtotal Participating Mortgage Bonds 1,594
--------------
Mortgage Bonds
Applewood (a.k.a. Paola) Paola, KS Jul-99 48 518 518 517 553
Autumn Oaks/Crest at Thousand Oaks Feb-03 410 534 534 N/A N/A
Charter House (2) Lenexa, KS Dec-96 ---- N/A N/A N/A N/A
Cielo Vista El Paso, TX Aug-99 378 454 423 425 423
Country Club Topeka, KS Jul-99 101 447 451 439 442
Delta Village Stockton, CA Jun-99 80 586 585 583 544
Elmbrooke Minnetonka, MN Aug-00 54 1,062 1,063 1,022 705
Florida A&M Tallahassee, FL Feb-00 96 1,583 1,380 1,383 1,384
Gannon (Dade) (3) Miami, FL Feb-98 575 821 815 753 728
Gannon (St. Louis) St. Louis, MO Feb-98 336 594 592 578 554
Hidden Valley Kansas City, MO Dec-96 82 577 575 553 538
Honey Creek Dallas, TX Mar-99 656 540 542 551 555
Lake Piedmont Indianapolis, IN Apr-98 648 501 494 481 472
Monroe (Oakmont, Towne Oak) Monroe, LA Dec-98 364 491 489 481 477
Mountain View (Willowgreen) Tacoma, WA Nov-86 241 645 643 633 610
Northridge Park II Salinas, CA Aug-87 128 1,015 1,007 1,032 1,023
Oakbrook Topeka, KS Dec-96 170 472 462 442 446
Oklahoma City (4) Oklahoma City, OK Aug-98 774 491 489 484 468
Orangevale Orange, CA Apr-98 64 969 968 968 915
Parkwood Turlock, CA Jun-99 180 482 479 469 449
Riverset II (1) Memphis, TN Jan-96 ---- N/A N/A N/A N/A
Riverview Fulton County, GA Jun-00 228 655 655 656 N/A
Sahuarita Sahuarita, AZ Jun-99 52 427 446 459 546
Santa Fe Springs Phoenix, AZ Jun-00 310 593 594 608 592
Shadowbrook Selma, CA Jun-99 193 510 506 482 475
Silver Springs Kent, WA Dec-99 250 778 777 796 782
Southwind Sacramento, CA Aug-00 88 737 737 677 666
Torries Chase Olathe, KS Dec-96 99 516 517 505 488
Village Apartments Baytown, TX May-00 210 585 585 568 491
Village at Stone Mountain Stone Mountain, GA Oct-97 722 785 757 747 716
Village Green Austin, TX Feb-00 200 638 637 634 634
Weatherstone Rochester, MN Sep-00 100 798 804 805 810
Western Hills Overland Park, KS Dec-98 80 527 523 502 497
Willow Key Orlando, FL Mar-99 384 705 706 672 633
Woodglen Houston, TX Dec-99 250 676 676 650 647
Woodmark Woodland, CA Jun-99 173 680 680 680 684
--------------
Subtotal Mortgage Bonds 8,724
--------------
Participating Subordinate Mortgage Bonds:
Barkley Place Ft. Myers, FL May-87 156 2,115 2,094 2,050 2,110
Gilman Meadows Issaquah, WA Mar-87 125 957 993 1,020 1,022
Hamilton Chase Chattanooga, TN Feb-87 300 626 624 615 605
Mallard Cove I & II Everett, WA Feb-87 198 715 714 732 744
Meadows Memphis, TN Jan-88 200 613 605 603 602
Montclair Springfield, MO Oct-86 159 1,846 1,836 1,833 1,841
Newport Village Thornton, CO Dec-86 220 843 854 842 817
Nicollet Ridge Burnsville, MN Dec-87 339 951 954 941 923
Riverset II Memphis, TN Jan-96 148 713 702 709 705
Steeplechase Knoxville, TN Oct-88 450 616 613 604 565
Whispering Lake Kansas City, MO Oct-87 384 658 656 647 648
--------------
Subtotal Participating Subordinate Mortgage Bonds 2,679
--------------
Occupancy
-------------------------------------------------
Month Ended Month Ended Month Ended Month Ended
Month/Year Apartment Sept 30, June 30, Sept 30, Sept 30,
Apartment Community Location Acquired Units 2003 2003 2002 2001
------------------- -------- ---------- --------- -------------------------------------------------
Subordinate Mortgage Bonds:
CAPREIT Sep-99 ---- N/A N/A N/A N/A
Cinnamon Ridge Jan-99 ---- N/A N/A N/A N/A
Farmington Meadows Aloha, OR Aug-99 69 100.0% 100.0% 98.6% 100.0%
Independence Ridge Independence, MO Aug-96 336 81.3% 75.9% 75.3% 78.9%
Locarno Kansas City, MO Aug-96 110 81.8% 89.1% 90.0% 94.5%
Olde English Manor Wichita, KS Nov-99 ---- N/A N/A N/A N/A
Peaks of Conyer Sep-01 260 81.9% 75.2% 88.8% N/A
Rillito Village Jul-00 ---- N/A N/A N/A N/A
Winter Oaks Winter Haven, FL Nov-99 460 91.1% 92.2% 93.7% 88.5%
--------------
Subtotal Subordinate Mortgage Bonds 1,235
--------------
Other Bond Related Investments:
Briarwood Virginia Beach, VA Dec-98 600 95.8% 98.3% 97.5% 95.5%
Cinnamon Ridge Egan, MN Dec-97 264 95.8% 97.3% 97.0% 90.5%
Golfside Villas (f.k.a. Club West) Dade Co., FL Mar-99 194 99.5% 99.5% 100.0% 100.0%
Park at Landmark Sep-00 396 97.0% 95.7% 99.0% 99.0%
Poplar Glen Columbia, MD Jun-97 191 93.7% 93.2% 95.3% 94.8%
RITES - Charter House Lenexa, KS Dec-96 280 94.3% 92.5% 92.9% 95.4%
RITES - Indian Lakes Virginia Beach, VA Jul-97 296 98.0% 90.9% 86.8% 95.9%
RITES - LaPaloma Azusa, CA Apr-99 120 99.2% 100.0% 98.3% 96.7%
RITES - LeMirador (Coleman Senior) San Jose, CA Apr-98 141 80.1% 83.7% 85.8% 97.9%
RITES - Museum Towers Apr-01 286 95.8% 95.8% 94.1% 95.5%
RITES - Olde English Manor Wichita, KS Jun-98 264 75.8% 76.5% 86.4% 90.5%
RITES - Palisades Park Universal City, TX Feb-98 304 99.0% 93.8% 95.7% 99.3%
RITES - Pavillion Pico Rivera, CA Apr-99 132 100.0% 100.0% 100.0% 99.2%
RITES - Queen Anne IV Weymouth, MA Jul-98 110 94.5% 91.8% 93.6% 97.3%
RITES - Rancho/Villas San Antonio, TX May-00 417 89.6% 88.6% 90.2% 82.7%
RITES - Rillito Village Tucson, AZ Aug-98 272 94.5% 89.3% 92.6% 90.4%
RITES - Riverset (1) Memphis, TN Aug-88 352 91.4% 89.0% 94.0% 89.0%
RITES - Riverset II (1) Memphis, TN Jan-96 ---- N/A N/A N/A N/A
RITES - Sienna(a.k.a. Italian
Gardens) San Jose, CA Apr-98 140 88.6% 90.0% 82.9% 97.1%
RITES - Sonterra San Antonio, TX May-98 156 90.4% 87.8% 91.0% 84.6%
RITES - Southgate Crossings Columbia, MD Jun-97 215 94.0% 98.1% 97.2% 97.2%
RITES - Southwood Richmond, VA Nov-97 1,286 66.0% 72.0% 84.4% 85.4%
--------------
Subtotal Other Bond Related Investments 6,416
--------------
Total Units/Weighted Average Investments 20,648 90.9% 89.9% 92.6% 92.2%
==============
Total/Same Stores (5) 2001 19,650 91.0% 90.0% 92.6% 92.2%
Total/Same Stores (5) 2002 20,238 91.0% 90.0% 92.6%
Construction/Substantial Rehab Properties and Other Investments
Arlington Arlington, TX Dec-00 176 36.9% 34.1% 9.7% N/A
Barrington at Beach Street Ft. Worth, TX Oct-00 398 76.4% 65.1% 44.5% 3.5%
Bedford Park Indianapolis, IN Oct-00 312 67.6% 69.6% 67.9% 37.8%
CAPREIT Joint Venture (6) Jun-02 6,279 94.5% 95.6% 95.2% N/A
CAPREIT TERA (7) Mar-01 2,942 94.3% 94.2% 92.8% N/A
Cedar Park Ranch Aug-03 180 N/A N/A N/A N/A
Chancellor Nov-01 101 N/A N/A N/A N/A
Chancellor II Mar-02 46 N/A N/A N/A N/A
City Views at Rosa Burney Park Dec-02 180 73.9% 80.6% N/A N/A
Cliffs at Grove Barton Apr-03 132 N/A N/A N/A N/A
Cool Springs Franklin, TN Aug-00 124 61.3% 54.8% 44.4% 9.7%
Coronel Village Apr-02 48 N/A N/A N/A N/A
Desert Tree Estates Sep-03 196 N/A N/A N/A N/A
Eden Park May-03 104 N/A N/A N/A N/A
Evergreen at Mesquite Aug-03 200 N/A N/A N/A N/A
Fort Branch Austin, TX Dec-00 250 88.4% 88.0% 36.8% N/A
Hidden Brooks Sep-01 201 67.7% 71.6% 86.1% N/A
Jefferson at Town Lake Dec-02 216 88.0% N/A N/A N/A
Lake Pleasant Village May-03 152 N/A N/A N/A N/A
Las Trojas Mar-02 49 N/A N/A N/A N/A
Liberty Park Townhomes Feb-03 184 54.9% 64.7% N/A N/A
Lincoln Corner Dec-01 134 N/A N/A N/A N/A
Meridian at Bridgewater Bridgewater, NJ Nov-99 90 90.0% 82.2% 83.3% 30.0%
Mountain View Village Jun-02 220 N/A N/A N/A N/A
North White Road Nov-01 157 11.5% N/A N/A N/A
Oak Grove Commons Dec-01 168 83.9% 23.8% N/A N/A
Olathe Senior Residences Dec-02 144 N/A N/A N/A N/A
Osborne Place Manor Dec-02 50 N/A N/A N/A N/A
Penn Valley Dec-01 42 N/A N/A N/A N/A
Sanger Trails Dec-02 208 10.1% N/A N/A N/A
Sycamore Senior Village Jun-02 300 N/A N/A N/A N/A
Village at Sun Valley Mesa, AZ May-00 276 84.1% 82.6% 67.4% 11.2%
Walnut Grove Jul-03 60 N/A N/A N/A N/A
Walnut Tree Mar-02 64 N/A N/A N/A N/A
Woodland Village May-03 198 N/A N/A N/A N/A
--------------
Subtotal Construction/Rehab Properties 14,581
--------------
Total Units 35,229
==============
Avg. Monthly Rent
Per Apartment Unit
-----------------------------------------
Month Month Month Month
Ended Ended Ended Ended
Month/Year Apartment Aug 31, June 30, Sept 30, Sept 30,
Apartment Community Location Acquired Units 2003 2003 2002 2001
------------------- -------- ---------- --------- -----------------------------------------
Subordinate Mortgage Bonds:
CAPREIT Sep-99 ---- N/A N/A N/A N/A
Cinnamon Ridge Jan-99 ---- N/A N/A N/A N/A
Farmington Meadows Aloha, OR Aug-99 69 814 814 814 814
Independence Ridge Independence, MO Aug-96 336 554 554 553 545
Locarno Kansas City, MO Aug-96 110 884 887 882 861
Olde English Manor Wichita, KS Nov-99 ---- N/A N/A N/A N/A
Peaks of Conyer Sep-01 260 726 726 735 N/A
Rillito Village Jul-00 ---- N/A N/A N/A N/A
Winter Oaks Winter Haven, FL Nov-99 460 562 563 554 541
--------------
Subtotal Subordinate Mortgage Bonds 1,235
--------------
Other Bond Related Investments:
Briarwood Virginia Beach, VA Dec-98 600 646 642 614 586
Cinnamon Ridge Egan, MN Dec-97 264 964 952 925 933
Golfside Villas (f.k.a. Club West) Dade Co., FL Mar-99 194 620 618 606 581
Park at Landmark Sep-00 396 1,055 1,058 1,091 1,015
Poplar Glen Columbia, MD Jun-97 191 999 991 956 915
RITES - Charter House Lenexa, KS Dec-96 280 625 625 622 613
RITES - Indian Lakes Virginia Beach, VA Jul-97 296 786 785 785 766
RITES - LaPaloma Azusa, CA Apr-99 120 645 643 621 583
RITES - LeMirador (Coleman Senior) San Jose, CA Apr-98 141 859 858 842 799
RITES - Museum Towers Apr-01 286 1,389 1,389 1,363 1,355
RITES - Olde English Manor Wichita, KS Jun-98 264 500 500 489 472
RITES - Palisades Park Universal City, TX Feb-98 304 561 559 547 525
RITES - Pavillion Pico Rivera, CA Apr-99 132 671 672 660 659
RITES - Queen Anne IV Weymouth, MA Jul-98 110 1,093 1,097 1,099 1,073
RITES - Rancho/Villas San Antonio, TX May-00 417 541 546 492 541
RITES - Rillito Village Tucson, AZ Aug-98 272 473 471 444 450
RITES - Riverset (1) Memphis, TN Aug-88 352 719 707 698 996
RITES - Riverset II (1) Memphis, TN Jan-96 ---- N/A N/A N/A N/A
RITES - Sienna (a.k.a. Italian
Gardens) San Jose, CA Apr-98 140 817 812 799 787
RITES - Sonterra San Antonio, TX May-98 156 858 861 855 845
RITES - Southgate Crossings Columbia, MD Jun-97 215 1,014 1,005 965 925
RITES - Southwood Richmond, VA Nov-97 1,286 496 499 487 489
--------------
Subtotal Other Bond Related Investments 6,416
--------------
Total Units/Weighted Average Investments 20,648 696 691 683 678
==============
Total/Same Stores (5) 2001 19,650 702 698 687 678
Total/Same Stores (5) 2002 20,238 699 695 683
Construction/Substantial Rehab Properties and Other Investments
Arlington Arlington, TX Dec-00 176 1,389 1,389 N/A N/A
Barrington at Beach Street Ft. Worth, TX Oct-00 398 799 800 806 N/A
Bedford Park Indianapolis, IN Oct-00 312 529 434 547 519
CAPREIT Joint Venture (6) Jun-02 6,279 740 745 741 N/A
CAPREIT TERA (7) Mar-01 2,942 602 605 625 N/A
Cedar Park Ranch Aug-03 180 N/A N/A N/A N/A
Chancellor Nov-01 101 N/A N/A N/A N/A
Chancellor II Mar-02 46 N/A N/A N/A N/A
City Views at Rosa Burney Park Dec-02 180 568 569 N/A N/A
Cliffs at Grove Barton Apr-03 132 N/A N/A N/A N/A
Cool Springs Franklin, TN Aug-00 124 1,952 1,936 1,946 1,953
Coronel Village Apr-02 48 N/A N/A N/A N/A
Desert Tree Estates Sep-03 196 N/A N/A N/A N/A
Eden Park May-03 104 N/A N/A N/A N/A
Evergreen at Mesquite Aug-03 200 N/A N/A N/A N/A
Fort Branch Austin, TX Dec-00 250 727 734 821 N/A
Hidden Brooks Sep-01 201 1,044 1,036 1,036 N/A
Jefferson at Town Lake Dec-02 216 1,412 N/A N/A N/A
Lake Pleasant Village May-03 152 N/A N/A N/A N/A
Las Trojas Mar-02 49 N/A N/A N/A N/A
Liberty Park Townhomes Feb-03 184 490 490 N/A N/A
Lincoln Corner Dec-01 134 N/A N/A N/A N/A
Meridian at Bridgewater Bridgewater, NJ Nov-99 90 3,779 3,818 3,496 3,051
Mountain View Village Jun-02 220 N/A N/A N/A N/A
North White Road Nov-01 157 N/A N/A N/A N/A
Oak Grove Commons Dec-01 168 N/A N/A N/A N/A
Olathe Senior Residences Dec-02 144 N/A N/A N/A N/A
Osborne Place Manor Dec-02 50 N/A N/A N/A N/A
Penn Valley Dec-01 42 N/A N/A N/A N/A
Sanger Trails Dec-02 208 N/A N/A N/A N/A
Sycamore Senior Village Jun-02 300 N/A N/A N/A N/A
Village at Sun Valley Mesa, AZ May-00 276 684 684 681 643
Walnut Grove Jul-03 60 N/A N/A N/A N/A
Walnut Tree Mar-02 64 N/A N/A N/A N/A
Woodland Village May-03 198 N/A N/A N/A N/A
--------------
Subtotal Construction/Rehab Properties 14,581
--------------
Total Units 35,229
==============
(1) The Company owns a participating bond, a participating subordinate bond and
a RITES interest collateralized by the Riverset property.
(2) The Company owns a non-participating bond and a RITES interest
collateralized by the Charter House property.
(3) The Dade Gannon Portfolio represents three properties.
(4) The Oklahoma City Portfolio represents three properties.
(5) Same Store includes only properties reporting for all three quarters.
(6) CAPREIT Joint Venture represents twenty properties (not included previously
in CAPREIT Portfolio).
(7) The CAPREIT TERA Portfolio represents eleven properties.
Exhibit 99.2
------------
INFORMATION FOR RELEASE
MuniMae Reports 2003 Third Quarter Results
27th Consecutive Increase in Distribution to Common Shares
BALTIMORE (October 16, 2003) - Municipal Mortgage & Equity, LLC (NYSE: MMA),
known as MuniMae, reported net income allocated to common shares of $18.1
million for the quarter ended September 30, 2003, compared to $0.2 million for
the same period in 2002. Diluted earnings per share were $0.62 for the quarter,
compared to $0.01 for the same period in 2002. The substantial changes in these
GAAP numbers, which do not impact our cash available for distribution described
below, resulted primarily from a $13.4 million improvement in unrealized gains
on derivative securities between the third quarter of 2002 and the latest
quarter.
Cash Available for Distribution ("CAD") to common shares, the primary measure of
the Company's distribution paying ability, increased 19% for the quarter ended
September 30, 2003 compared to the same period in 2002. CAD per common share
increased 4% compared to the same period in 2002. The Board of Directors raised
the quarterly distribution to holders of our common shares to $0.45, an increase
of 2% over the same period in 2002.
Mark K. Joseph, Chairman of the Board and CEO of MuniMae, commented, "This has
been a very productive quarter for MuniMae. We are pleased to have raised our
distribution for the 27th consecutive quarter. In addition, the Company closed
the acquisition of the HCI unit of Lend Lease Corporation Limited. After the
completion of the third quarter, on October 15th, the Company completed another
offering of common equity, which generated $88.4 million in gross proceeds after
the underwriters exercised their full overallotment option. The Company was very
pleased with the reception by the markets."
Summary Results - GAAP
-----------------------
The table below summarizes the Company's results for the third quarter of 2003
and the prior-year period:
Third Quarter
--------------------------------
2003 2002
----- ----
Net Income to Common Shares ($ millions) $18.1 $0.2
Per Share Results
Basic ($) $0.63 $0.01
Diluted ($) $0.62 $0.01
The attached condensed consolidated statements of income represent the GAAP
results of operations of the Company for the three- and nine-month periods ended
September 30, 2003 and 2002.
Summary Results - CAD
----------------------
For the third quarter of 2003, CAD to common shares was $15.3 million. The 2003
third quarter per share distribution to common shareholders of $0.45 represents
a payout ratio of 96%. The third quarter payout ratio is higher than in past
quarters due to the issuance of common shares in the recent offering, which
closed subsequent to quarter-end but before the record date for the third
quarter distribution. Excluding those shares issued in the recent offering, the
payout ratio would have been 85%. (The Company uses CAD as its primary measure
of performance and believes it to be illustrative of its distribution-paying
ability. CAD differs from net income because of variations between GAAP income
and actual cash received. These variations are described in the note to the
attached calculation of CAD statement.)
Third Quarter
--------------------------------------------------
2003 2002 Change
----- ----- ------
CAD to Common ($ millions) $15.3 $12.9 19%
CAD per Common Share ($) $0.53 $0.51 4%
A reconciliation of GAAP net income to CAD to common shares is attached.
Third Quarter Distribution
---------------------------
MuniMae's third quarter distribution to common shareholders of $0.45 annualizes
to $1.80 per share. Based on yesterday's closing share price of $24.30, MuniMae
common shares have an annualized yield to shareholders of 7.4%. Based on the
assumption that the Company's income is 75% - 80% exempt from Federal income
tax, absent the impact of capital gains and assuming a 35% tax bracket, the
taxable equivalent yield would be 10.4% - 10.6%. The record date for the
quarterly distribution is October 27, and the payment date is November 7.
About Municipal Mortgage & Equity
---------------------------------
MuniMae and its subsidiaries originate, service and asset manage investments in
multifamily debt and equity for its own account and on behalf of others. MuniMae
conducts these operations under the trade name MMA Financial, LLC. As of
September 30, 2003, assets under management totaled $7.8 billion secured by
2,054 properties containing 223,766 units in 48 states including the District of
Columbia and the U.S. Virgin Islands. For its proprietary accounts, MuniMae
primarily holds tax-exempt multifamily housing bonds. This on-balance sheet
portfolio of tax-exempt bonds is secured by 150 properties containing 35,229
units in 27 states. For a portion of these bonds, MuniMae participates in the
performance of the underlying properties.
MuniMae is organized as a limited liability company. This structure allows
MuniMae to combine the limited liability, governance and management
characteristics of a corporation with the pass-through income features of a
partnership. As a result, the tax-exempt income derived from certain investments
remains tax-exempt when passed through to shareholders. Distributions to
shareholders are normally declared quarterly and paid in February, May, August
and November.
The calculation of Cash Available for Distribution is the basis for the
determination of the Company's quarterly distributions to common shares, is used
by securities analysts, and is presented as a supplemental measure of the
Company's performance. The calculation is not approved by the Securities and
Exchange Commission nor is it required by GAAP and should not be considered as
an alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flows as a measure of liquidity. The
Company believes that Cash Available for Distribution provides relevant
information about its operations and is necessary, along with net income, for
understanding its operating results.
This press release contains statements, including those about prospective
distributions and the tax-exempt nature of those distributions, that are forward
looking in nature and reflect management's current views with respect to future
events and financial performance. These statements are subject to many
uncertainties and risks and should not be considered guarantees of future
performance. This press release does not constitute an offer to sell any
securities of Municipal Mortgage & Equity, LLC.
Actual results may vary materially from projected results based on a number of
factors, including the actual performance of the properties pledged as
collateral for the portfolio, general conditions in the local real estate
markets in which the properties are located and prevailing interest rates.
MUNIMAE: TAX-EXEMPT DISTRIBUTIONS AND GROWTH THROUGH REAL ESTATE
www.mmafin.com
--------------
Contacts
Investor Relations:
Angela Richardson, 888/788-3863
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(unaudited)
For the three months ended For the nine months ended
September 30, September 30,
----------------------------- -----------------------------
2003 2002 2003 2002
-------------- ------------- ------------- --------------
INCOME:
Interest income
Interest on bonds and residual interests in bond
securitizations $ 15,612 $ 15,409 $ 45,526 $ 45,970
Interest on loans 9,408 8,676 26,474 25,700
Interest on short-term investments 308 260 832 991
-------------- ------------- ------------- --------------
Total interest income 25,328 24,345 72,832 72,661
-------------- ------------- ------------- --------------
Fee income
Syndication fees 5,764 767 9,000 4,765
Origination fees 862 2,014 3,779 4,608
Loan servicing fees 1,716 1,544 5,463 5,112
Asset management and advisory fees 3,191 969 5,465 2,876
Other income 3,582 900 9,088 3,304
-------------- ------------- ------------- --------------
Total fee income 15,115 6,194 32,795 20,665
-------------- ------------- ------------- --------------
Net gain on sales 8,288 657 11,019 3,526
-------------- ------------- ------------- --------------
Total income 48,731 31,196 116,646 96,852
-------------- ------------- ------------- --------------
EXPENSES:
Interest expense (Note 1) 15,690 8,771 34,782 26,230
Salaries and benefits 12,065 5,446 26,702 16,203
General and administrative 3,385 1,756 7,013 5,179
Professional fees 1,105 884 2,971 3,488
Amortization of intangibles 2,863 334 3,666 985
-------------- ------------- ------------- --------------
Total expenses 35,108 17,191 75,134 52,085
-------------- ------------- ------------- --------------
Net holding gains (losses) on derivatives 3,498 (9,921) 3,922 (14,530)
Impairments and valuation allowances related to investments - - (1,144) (110)
Net losses from equity investments in partnerships (1,608) (1,488) (3,961) (1,717)
Income tax benefit (expense) 2,622 635 3,094 (1,224)
Income allocable to preferred shareholders in a subsidiary
company (Note 1) - (2,994) (5,989) (8,983)
-------------- ------------- ------------- --------------
Net income from continuing operations 18,135 237 37,434 18,203
Discontinued operations - - 25,748 -
-------------- ------------- ------------- --------------
Net income $ 18,135 $ 237 $ 63,182 $ 18,203
============== ============= ============= ==============
Net income allocated to:
Term growth shares - - - 153
-------------- ------------- ------------- --------------
Common shares $ 18,135 $ 237 $ 63,182 $ 18,050
============== ============= ============= ==============
EARNINGS PER COMMON SHARE:
Basic earnings per common share:
Net income from continuing operations $ 0.63 $ 0.01 $ 1.32 $ 0.73
Discontinued operations - - 0.91 -
-------------- ------------- ------------- --------------
Basic earnings per common share $ 0.63 $ 0.01 $ 2.23 $ 0.73
============== ============= ============= ==============
Weighted average common shares outstanding 28,842,447 25,329,103 28,353,040 24,728,414
Diluted earnings per common share:
Net income from continuing operations $ 0.62 $ 0.01 $ 1.30 $ 0.71
Discontinued operations - - 0.90 -
-------------- ------------- ------------- --------------
Diluted earnings per common share $ 0.62 $ 0.01 $ 2.20 $ 0.71
============== ============= ============= ==============
Weighted average common shares outstanding 29,224,605 25,916,151 28,711,892 25,323,789
Note 1: As the result of adopting Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("FAS 150"), as of July 1, 2003 the Company was required to reclassify its
preferred shareholders' equity of $160.5 million, recording the $168.0
million redemption obligation as a liability and the $7.5 million of
preferred equity issue costs as an asset, to be amortized until the
redemption dates, on the consolidated balance sheets. In addition, amounts
previously classified as distributions paid to the preferred shareholders
have been recorded as interest expense starting in the third quarter of
2003.
MUNICIPAL MORTGAGE & EQUITY, LLC
RECONCILIATION OF GAAP INCOME TO CASH AVAILABLE FOR DISTRIBUTION
(In thousands)
(unaudited)
For the three months ended For the nine months ended
September 30, September 30,
------------------------------- -------------------------------
2003 2002 2003 2002
-------------- --------------- -------------- ---------------
INCOME:
Interest income
Interest on bonds and residual interests in bond
securitizations $ 15,612 $ 15,409 $ 45,526 $ 45,970
Interest on loans 9,408 8,676 26,474 25,700
Interest on short-term investments 308 260 832 991
-------------- --------------- -------------- ---------------
Total interest income 25,328 24,345 72,832 72,661
-------------- --------------- -------------- ---------------
Fee income
Syndication fees 5,764 767 9,000 4,765
Origination fees 862 2,014 3,779 4,608
Loan servicing fees 1,716 1,544 5,463 5,112
Asset management and advisory fees 3,191 969 5,465 2,876
Other income 3,582 900 9,088 3,304
-------------- --------------- -------------- ---------------
Total fee income 15,115 6,194 32,795 20,665
-------------- --------------- -------------- ---------------
Net gain on sales 8,288 657 11,019 3,526
-------------- --------------- -------------- ---------------
Total income 48,731 31,196 116,646 96,852
-------------- --------------- -------------- ---------------
EXPENSES:
Interest expense 15,690 8,771 34,782 26,230
Salaries and benefits 12,065 5,446 26,702 16,203
General and administrative 3,385 1,756 7,013 5,179
Professional fees 1,105 884 2,971 3,488
Amortization of intangibles 2,863 334 3,666 985
-------------- --------------- -------------- ---------------
Total expenses 35,108 17,191 75,134 52,085
-------------- --------------- -------------- ---------------
Net holding gains (losses) on derivatives 3,498 (9,921) 3,922 (14,530)
Impairments and valuation allowances related to investments - - (1,144) (110)
Net losses from equity investments in partnerships (1,608) (1,488) (3,961) (1,717)
Income tax benefit (expense) 2,622 635 3,094 (1,224)
Income allocable to preferred shareholders in a subsidiary
company - (2,994) (5,989) (8,983)
-------------- --------------- -------------- ---------------
Net income from continuing operations 18,135 237 37,434 18,203
Discontinued operations - - 25,748 -
-------------- --------------- -------------- ---------------
Net income $ 18,135 $ 237 $ 63,182 $ 18,203
============== =============== ============== ===============
Net income allocated to:
Term growth shares - - - 153
-------------- --------------- -------------- ---------------
Common shares $ 18,135 $ 237 $ 63,182 $ 18,050
============== =============== ============== ===============
Conversion to Cash Available for Distribution:
(1)Mark to market adjustments $ (3,498) $ 9,921 $ (3,922) $ 14,530
(2)Equity investments 1,995 3,248 7,586 3,767
(3)Net gain on sales (577) (450) (11,390) (3,177)
(3)Amortization of capitalized mortgage servicing fees 390 334 1,156 985
(3)Amortization of asset management contracts 2,422 - 2,422 -
(4)Origination fees, syndication fees and other income, net 2,675 53 4,291 2,176
(5)Valuation allowances and other-than-temporary impairments - - 1,097 110
(6)Deferred tax expense (2,622) (462) (1,010) 638
(7)Discontinued operations - - (25,748) -
(7)Interest income - - 10,793 -
(8)Fund income (3,629) - (3,629) -
-------------- --------------- -------------- ---------------
Cash Available for Distribution (CAD) $ 15,291 $ 12,881 $ 44,828 $ 37,079
============== =============== ============== ===============
Notes
(1) For GAAP reporting, the Company records the non-cash change in fair value of
its investment in interest rate swaps and other derivative financial instruments
through net income. These non-cash gains and losses are not included in the
Company's calculation of CAD.
(2) For GAAP reporting, the Company accounts for various investments in
partnerships using the equity accounting method. As a result, the Company's
allocable share of the income or loss from the partnerships is reported in
income (losses) from equity investments in partnerships. The income from these
partnerships includes depreciation expense and changes in the fair value of
investments in derivatives. For GAAP reporting, distributions are treated as a
return of capital. For CAD reporting, the Company records the cash distributions
it receives from the partnerships as other income. In addition, a portion of the
income or loss from partnerships is reduced by a minority interest for both GAAP
and CAD.
(3) For GAAP reporting, the Company recognizes non-cash gains and losses and
amortization of intangible assets, including (a) non-cash gains and losses
associated with the sale of assets or capitalization of mortgage servicing
rights; (b) amortization of mortgage servicing rights over the estimated life of
the serviced loans; and (c) amortization of asset management contracts recorded
in connection with a July 2003 acquisition. These non-cash items are not
included in CAD.
(4) This adjustment reflects the net difference, for the relevant period,
between fees reflected in income when received for CAD and the recognition of
fees for GAAP. This line item reflects several types of income:
(a) Origination fees and certain other income amounts, which are recognized
as income when received for CAD purposes, but for GAAP reporting are
amortized over the life of the associated investment.
(b) Syndication fees, which are recognized as income when earned for CAD
purposes, but for GAAP reporting a portion of the fee may be deferred until
investors have paid in greater than 20% of their total capital
contributions to the tax credit funds.
(c) Guarantee fees, which are recognized as income when received for CAD
purposes, but for GAAP reporting are recorded into income over the
guarantee period.
(d) Asset management fees, which are recognized as income when earned and
collectible for CAD purposes are applied first to relieve accounts
receivable recorded in conjunction with the July 2003 acquisition, and
second as income consistent with the CAD revenue recognition.
(5) For GAAP reporting, the Company records valuation allowances and
other-than-temporary impairments on its investments in loans, bonds and other
bond-related investments. Such non-cash charges do not affect the cash flow
generated from the operation of the underlying properties, distributions to
shareholders, or the tax-exempt status of the income of the financial obligation
under the bonds. Therefore, these items are not included in the calculation of
CAD.
(6) For GAAP reporting, the Company's income tax expense contains both a current
and a deferred component. Only the Company's current income tax expense is
reflected in CAD.
(7) For GAAP reporting, the Company recognized a gain upon the sale of a
property. This gain was required to be classified as discontinued operations
because the Company owned the property prior to the sale. For CAD reporting, the
gain was significantly less due to recording a portion of the proceeds as
interest income. In addition, the carrying value of the tax-exempt bond
associated with the property was significantly more for CAD due to an impairment
previously recognized for GAAP.
(8) For those of the Company's tax credit equity syndication funds in which the
Company provides a guarantee or otherwise has continuing involvement in the
underlying assets of the fund, GAAP accounting requires the Company to record
the net income (loss) from the fund. This non-cash item is not reflected in CAD.
MUNICIPAL MORTGAGE & EQUITY, LLC
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(Unaudited)
(In thousands, except share and per share data)
For the three months ended For the nine months ended
September 30, September 30,
------------------------------ ---------------------------
2003 2002 2003 2002
-------------- --------------- ------------- ------------
SOURCES OF CASH:
Interest on bonds, residual interests in bond securitizations and
loans $ 24,626 $ 23,331 $ 81,071 $ 69,671
Interest on short-term investments 277 260 801 991
Syndication fees 6,588 767 9,824 4,765
Origination fees 1,887 2,206 5,758 6,719
Loan servicing fees 1,708 1,544 5,452 5,112
Asset management and advisory fees 3,777 969 6,051 2,876
Distributions from equity investments in partnerships 1,946 1,760 5,493 2,050
Other income 2,384 878 8,696 3,462
Net gain (loss) on sales 3,239 207 (4,843) 349
-------------- --------------- ------------- ------------
TOTAL SOURCES OF CASH 46,432 31,922 118,303 95,995
-------------- --------------- ------------- ------------
EXPENSES:
Interest expense 11,920 8,134 29,861 24,324
Interest expense - preferred shares (Note 1) 2,994 - 2,994 -
Salaries and benefits 12,065 5,446 26,702 16,203
Professional fees 1,105 884 2,971 3,488
General and administrative 3,057 1,756 6,995 5,179
Loan loss expense - - 47 -
Income tax expense (benefit) - (173) (2,084) 586
-------------- --------------- ------------- ------------
TOTAL EXPENSES 31,141 16,047 67,486 49,780
-------------- --------------- ------------- ------------
CASH AVAILABLE FOR DISTRIBUTION 15,291 15,875 50,817 46,215
-------------- --------------- ------------- ------------
LESS:
Cash allocable to preferred shareholders and term growth shares,
including preferred shareholders in a subsidiary company (Note 1) - 2,994 5,989 9,136
-------------- --------------- ------------- ------------
CASH AVAILABLE FOR DISTRIBUTION TO COMMON SHARES $ 15,291 $ 12,881 $ 44,828 $ 37,079
============== =============== ============= ============
CAD PER COMMON SHARE $ 0.53 $ 0.51 $ 1.55 $ 1.47
============== =============== ============= ============
COMMON SHARES OUTSTANDING 28,917,912 25,349,585
============== ===============
CALCULATION OF CASH DISTRIBUTION:
CASH AVAILABLE FOR DISTRIBUTION
TO COMMON SHARES $ 15,291 $ 12,881 $ 44,828 $ 37,079
============== =============== ============= ============
ACTUAL AMOUNT PAID $ 14,643 $ 11,154 $ 40,383 $ 33,194
============== =============== ============= ============
PAYOUT RATIO (Note 2) 95.8% 86.6% 90.1% 89.5%
============== =============== ============= ============
COMMON SHARES OUTSTANDING FOR
DISTRIBUTION (Note 2) 32,540,412 25,349,585
============== ===============
CASH DISTRIBUTION PER COMMON SHARE $ 0.4500 $ 0.4400 $ 1.3425 $ 1.3125
============== =============== ============= ============
Note 1: As the result of adopting Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("FAS 150"), as of July 1, 2003 the Company was required to reclassify its
preferred shareholders' equity of $160.5 million, recording the $168.0
million redemption obligation as a liability and the $7.5 million of
preferred equity issue costs as an asset, to be amortized until the
redemption dates, on the consolidated balance sheets. In addition, amounts
previously classified as distributions paid to the preferred shareholders
have been recorded as interest expense starting in the third quarter of
2003.
Note 2: The payout ratio calculation is based on 32,540,412 common shares
outstanding to reflect the 3,622,500 common shares issued in October 2003
that will also receive the third quarter distribution.
The primary differences between Net Income as calculated under generally
accepted accounting principles ("GAAP") and Cash Available For Distribution
("CAD") result from the timing of income and expense recognition and non-cash
events. These differences between CAD and GAAP income include the treatment of
certain fees, which for CAD purposes are recognized when received but for GAAP
purposes are amortized into income over the relevant period. In addition, there
are differences related to non-cash gains and losses associated with bond
valuations and sales, non-cash gains and losses associated with changes in
market value of derivative financial instruments, amortization of goodwill and
intangibles and capitalization of mortgage servicing rights, which are not
included in the calculation of CAD.
The common shares outstanding reported for Cash Available for Distribution
are the actual shares outstanding at the end of the quarter. For GAAP, the
weighted average shares outstanding during the period are reported for the basic
net income per share calculation. The weighted average shares outstanding for
diluted net income per share include the potential dilutive effect from the
exercise of options, vesting of restricted shares, conversion of the preferred
shares and provision for shares to be awarded under the Midland acquisition earn
out provision.
MUNICIPAL MORTGAGE & EQUITY, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
September 30, December 31,
2003 2002
------------- ------------
ASSETS:
Investment in tax-exempt bonds and residual interests
in bond securitizations $ 804,276 $ 781,384
Loans receivable, net 472,620 422,299
Loans receivable held for sale 9,118 39,149
Investments in partnerships 233,032 99,966
Investment in derivative financial instruments 2,755 18,762
Cash, cash equivalents and interest receivable 62,268 59,902
Other assets 204,405 97,919
Goodwill 131,422 33,537
------------- ------------
TOTAL $ 1,919,896 $ 1,552,918
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Notes payable $ 609,506 $ 450,924
Short-term debt 191,835 219,945
Long-term debt 155,448 147,357
Preferred shares subject to mandatory redemption (Note 1) 168,000 -
Tax credit syndication guarantee liability 149,305 -
Residual interests in bond securitizations 1,925 1,447
Investment in derivative financial instruments 17,879 49,359
Other liabilities 59,346 36,357
Preferred shareholders' equity in a subsidiary company (Note 1) - 160,465
Shareholders' equity 566,652 487,064
------------- ------------
TOTAL $ 1,919,896 $ 1,552,918
============= ============
Note 1: As the result of adopting Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("FAS 150"), as of July 1, 2003 the Company was required to reclassify its
preferred shareholders' equity of $160.5 million, recording the $168.0
million redemption obligation as a liability and the $7.5 million of
preferred equity issue costs as an asset, to be amortized until the
redemption dates, on the consolidated balance sheets. In addition, amounts
previously classified as distributions paid to the preferred shareholders
have been recorded as interest expense starting in the third quarter of
2003.
Exhibit 99.3
------------
INFORMATION FOR RELEASE
MuniMae Structures $317 Million of Multifamily Financing
And Raises $145 Million in Capital During Third Quarter
BALTIMORE (October 16, 2003) -- Municipal Mortgage & Equity, LLC (NYSE: MMA)
known as MuniMae, announced today that it structured $317 million of financing
for multifamily housing during the third quarter of 2003. In addition, the
Company raised $145 million in tax credit equity.
Mark K. Joseph, Chairman of the Board and CEO of MuniMae, commented, "We are
pleased with the third quarter production activity. Consistent with our history,
and the cyclical nature of our business, the pipeline is looking stronger for
the fourth quarter. Our tax credit equity syndication volume has increased
significantly due to our July 2003 acquisition."
Investment Activity Summary
---------------------------
Highlights of third quarter and year-to-date origination activity include:
Third Quarter Year-to-Date
Volume (in millions) Volume (in millions)
-------------------- --------------------
Taxable Construction/Permanent Lending $102.4 $390.6
Tax-exempt Bonds Construction/Permanent 101.0 198.8
Supplemental Loans 17.8 42.3
Equity Investments 95.3 237.2
------- ------
Total $316.5 $868.9
======= ======
Capital Activity Summary
------------------------
In the third quarter of 2003, the Company raised $145.1 million of tax credit
equity from 16 third-party investors, bringing the year-to-date total to
$219.1 million in equity raised.
About Municipal Mortgage & Equity
---------------------------------
MuniMae and its subsidiaries originate, service and asset manage investments in
multifamily debt and equity for its own account and on behalf of others. MuniMae
conducts these operations under the trade name MMA Financial, LLC. As of
September 30, 2003, assets under management totaled $7.8 billion secured by
2,054 properties containing 223,766 units in 48 states including the District of
Columbia and the U.S. Virgin Islands. For its proprietary accounts, MuniMae
primarily holds tax-exempt multifamily housing bonds. This on-balance sheet
portfolio of tax-exempt bonds is secured by 150 properties containing 35,229
units in 27 states. For a portion of these bonds, MuniMae participates in the
performance of the underlying properties.
MuniMae is organized as a limited liability company, which makes it exempt from
tax at the corporate level and provides the benefit of corporate governance. In
addition, the Company passes through to its shareholders primarily tax-exempt
dividends, which are generated by its municipal bond investments. Distributions
to shareholders are normally declared quarterly and paid in February, May,
August and November.
This press release contains statements, including those about prospective
distributions and the tax-exempt nature of those distributions, that are forward
looking in nature and reflect management's current views with respect to future
events and financial performance. These statements are subject to many
uncertainties and risks and should not be considered guarantees of future
performance. Actual results may vary materially from projected results based on
a number of factors, including the actual performance of the properties pledged
as collateral for the portfolio, general conditions in the local real estate
markets in which the properties are located and prevailing interest rates.
MUNIMAE: TAX-EXEMPT DISTRIBUTIONS AND GROWTH THROUGH REAL ESTATE
www.mmafin.com
--------------
Contacts
Investor Relations
Angela Richardson, 888/788-3863