Criimi Mae earned 23 a share in 3rd quarter

November 03, 1994|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

Criimi Mae Inc. posted higher earnings for both the third-quarter and nine-month periods, but significant operational changes to stem the impact of rising interest rates could be in the offing, the company said yesterday.

The Rockville-based firm, the nation's largest real estate investment trust (REIT) specializing in government-insured mortgages, reported tax basis income of $5.78 million, or 23 cents a share, on operating revenues of $17.6 million in the quarter that ended Sept. 30. Those results compared to tax basis income of $5.2 million, or 26 cents a share, on operating revenues of $14.1 million in the same period last year.

For the REIT, tax basis income, rather than net income, determines the dividend to shareholders.

For the nine-month period, the firm reported tax basis income of $24.07 million, or 96 cents a share, on operating revenues of $47.2 million. Nine-month income, bolstered by gains from mortgage dispositions and higher interest income, was up 34 percent from the same period last year.

Criimi Mae shares closed at $8.50 yesterday, up 25 cents.

The company also disclosed yesterday that its board has authorized the hiring of Merrill Lynch, Pierce Fenner & Smith Inc. to advise Criimi Mae about a possible conversion from an advised REIT to a self-managed trust. The company, an affiliate of CRI Inc., is managed and operated by another CRI entity.

A conversion to a self-managed REIT probably would lead to an increase in Criimi Mae's dividend, slated to be $1.16 this year but expected to be lower next year because of interest rate increases. Criimi Mae has projected that its dividend will decrease to between 97 cents a share and $1.04 a share in 1995.

To offset the anticipated decline, Criimi Mae also has begun investing in high-yielding mortgage-backed securities and is studying raising additional equity. By the end of 1995, Criimi Mae expects mortgage-backed securities to make up 10 percent of its assets.

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