Thanks to a year of solid growth, and an October acquisition that bulked up its business, Baltimore-based Municipal Mortgage & Equity LLC has been elevated into the $2 billion club, nearly tripling its assets under management in the course of a year.
Municipal Mortgage & Equity, better known as MuniMae, last week reported its final financial results for 1999, a year in which income rose 51 percent, profit 4 percent and dividends paid out 4 percent. For MuniMae, however, the story of 1999 wasnt just a tale of the numbers -- it was about growth into new markets and new lines of business.
Thanks to the acquisition, the year that passed was one in which the company transformed itself from a multimarket firm with a niche focus into a national player thats more of a one-stop shop for financing in the multifamily housing arena.
It was certainly a year to be proud of, said Mark K. Joseph, MuniMaes chairman and chief executive officer.
Before last years buyout of the Clearwater, Fla.-based Midland Cos., MuniMae focused almost solely on the market for tax-free real estate bonds. It originated, serviced and managed the tax-free bonds used to finance apartment projects -- with the apartments serving to back some of the bonds -- and could also participate financially when those apartments increased in value.
As a company, it was a financial hybrid, combining features of real estate investment trusts (REITs), limited partnerships and tax-free bond funds. The corporate structure is important: It means that more than 85 percent of the dividends paid out to stockholders are exempt from federal income taxes. Because of that tax-free feature, with a recent dividend yield of 8.7 percent, an investor in the 39.6 percent tax bracket would have to find a taxable bond yielding 13.4 percent to enjoy the same yield as the dividend payout on MuniMaes stock. Such hefty yields typically accompany only those investments that carry a high level of default risk -- not something most investors want to shoulder, even for a higher yield.
From a product-line perspective, with the Midland acquisition, MuniMae now brings more to the table. First, it became a bigger company, growing from about $700 million in assets under management to right around $2 billion, Joseph said. It also grew geographically, since Midland had offices in San Francisco, Dallas and Detroit, as well as Clearwater.
