JAVELIN Mortgage Investment Corp. Reports 15.8% Annualized ROE From Taxable
REIT Income for Initial Operating Period
VERO BEACH, Fla., March 21, 2013 (GLOBE NEWSWIRE) -- JAVELIN Mortgage
Investment Corp. (NYSE:JMI) ("JAVELIN" or the "Company") today announced
financial results for the quarter ended December 31, 2012, which includes the
Company's initial operating period.
Fourth Quarter 2012 Highlights and Financial Information
*Estimated taxable REIT income of approximately $5.5 million ($0.73 per
Common share) for the initial operating period from October 9, 2012
through December 31, 2012
*Q4 2012 Common dividends paid were $3.45 million ($0.46 per Common share)
*Q4 2012 GAAP income of approximately $6.1 million ($0.89 per weighted
average Common share)
*Estimated taxable REIT income represents annualized yield on paid-in
capital of 15.8% for the 84 day initial operating period
*Average yield on assets of 3.20% and average net interest margin of 2.36%
*As of December 31, 2012, there were 7,500,050 Common shares outstanding
*Book Value (shareholders' equity) as of December 31, 2012 was $148.0
million or $19.74 per Common share outstanding.
*Paid-in capital as of December 31, 2012 was $150.0 million or $20.00 per
Common share outstanding
*The JAVELIN monthly "Company Update" can be found at www.javelinreit.com
Q4 2012 Results
JAVELIN commenced operations on October 9, 2012 with the completion of our
initial public and private offerings of a total of 7,500,000 Common shares,
which raised equity capital totaling $150.0 million. The Company completed the
substantial majority of its initial investments in Agency Securities by
October 16, 2012 and in Non-Agency Securities by November 9, 2012.The Company
completed the substantial majority of its initial hedging by October 16,
Taxable REIT Income and Core Income
Estimated taxable REIT income for the initial operating period endedDecember
31, 2012,was approximately $5.5 million, which represents an annualized
return on paid-in capital of 15.8% for this 84 day period. The Company
distributes dividends based on its estimate of taxable earnings per Common
share, not based on earnings calculated in accordance with Generally Accepted
Accounting Principles (GAAP). Taxable REIT income and GAAP earnings will
differ primarily because of the non-taxable unrealizedchanges in the value
ofthe Company's Non-Agency Securities portfolio and the Company's
derivatives, which the Company uses as hedges. These unrealized gains/losses
are included in GAAP earnings, whereas unrealized valuation changes are not
included in taxable income.
For the purposes of computing GAAP net income, the changes in fair value of
the Company's Agency Securities are excluded and instead reflected in other
The Company paid dividends of $0.23 per outstanding share of Common stock for
each of November and December, 2012, or a total of $3.45 million. The Company
had estimated taxable REIT income available to pay dividends of $5.5 million
in Q4 2012.Because the Company did not distribute the required minimum 85% of
taxable income before December 31, 2012, the Company accrued an excise tax
expense of $46,000. JAVELIN paid dividends in January and February 2013 that
were sufficient to maintain the Company's REIT status and avoid any additional
corporate tax expense.
Per Share Amounts
Calculation of quarterly GAAP income per Common share is based on the weighted
average Common shares outstanding for the quarter of 6,848,000. Calculation of
estimated taxable REIT income per Common Share is based on the weighted
average Common shares outstanding for the initial operating period of
7,500,050.Both average share figures reflect the completion of the offerings
on October 9, 2012. However, the calculation for the initial operating period
excludes the effects of the Company's nominal income, expenses and
capitalization prior to the commencement of operations. The Company has no
dilutive securities outstanding.
As of December 31, 2012, the Company's Agency Securities portfolio consisted
of fixed rate Fannie Mae, Freddie Mac and Ginnie Mae mortgage securities
valued at $1.1 billion. The Company's Non-Agency Securities portfolio was
valued at $130.0 million at year end.The annualized yield on average
assetswas3.20%, and the annualized cost of funds on average liabilities
(including realized cost of hedges) was 0.84% resulting in a net interest
spread of 2.36%.
Portfolio Financing, Leverage and Interest Rate Hedges
As ofDecember 31, 2012, the Company financed its portfolio with approximately
$1.1 billion of borrowings under repurchase agreements with a weighted average
maturity of 41 days.
The Company's debt to equity ratio, as measured against paid-in capital,
was7.57 to 1, and its ratio of debt to total shareholder equity was 7.67 to
1, each as of December 31, 2012.
The Company had a notional amount of $325.0 million of various maturities of
interest rate swap contracts with a weighted average swap rate of 1.5%. The
Company had a notional amount of $130.0 million of various maturities of
swaptions with a weighted average swap rate of 1.8%.
JAVELIN's management fee is 1.5% (per annum) of gross equity raised up to $1
billion and 1.0% (per annum) of gross equity raised above $1.0 billion.
Regulation G Reconciliation
Taxable REIT income is calculated according to the requirements of the
Internal Revenue Coderather than GAAP. The Company plans to distribute at
least 90% of its taxable REIT incomein order to maintain its tax
qualification as a REIT. The following table reconciles JAVELIN's results from
operations to estimated taxable REIT income for the period from June 21, 2012
through December 31, 2012.
Net income $ 6,098
Net book/tax differences on (978)
Unrealized change in derivatives 302
Excise tax expense 46
Estimated taxable income $ 5,468
JAVELIN believes that the foregoing reconciliation of taxable REIT income is
useful to investors because taxable REIT income is directly related to the
amount of dividends the Company is required to distribute in order to maintain
its REIT tax qualification status. However, because taxable REIT income is an
incomplete measure of the Company's financial performance and involves
differences from net income computed in accordance with GAAP, taxable REIT
income should be considered as supplementary to, and not as a substitute for,
JAVELIN's net income computed in accordance with GAAP as a measure of the
Company's financial performance.
JAVELIN Mortgage Investment Corp.
JAVELIN is a Maryland corporation that invests primarily in hybrid adjustable
rate, adjustable rate and fixed rate Agency and non-Agency residential
mortgage-backed securities. JAVELIN is externally managed and advised by
ARMOUR Residential Management LLC, an investment advisor registered with the
SEC. JAVELIN Mortgage Investment Corp. will elect to be taxed as a real
estate investment trust ("REIT") for U.S. Federal income tax purposes,
commencing with JAVELIN's taxable year ended December 31, 2012.
This press release includes "forward-looking statements" within the meaning of
the safe harbor provisions of the United States Private Securities Litigation
Reform Act of 1995.Actual results may differ from expectations, estimates
and projections and, consequently, you should not rely on these forward
looking statements as predictions of future events.Words such as "expect,"
"estimate," "project," "budget," "forecast," "anticipate," "intend," "plan,"
"may," "will," "could," "should," "believes," "predicts," "potential,"
"continue," and similar expressions are intended to identify such
forward-looking statements.These forward-looking statements involve
significant risks and uncertainties that could cause the actual results to
differ materially from the expected results. Additional information concerning
these and other risk factors are contained in the Company's most recent
filings with the Securities and Exchange Commission ("SEC").All subsequent
written and oral forward-looking statements concerning the Company are
expressly qualified in their entirety by the cautionary statements above.The
Company cautions readers not to place undue reliance upon any forward-looking
statements, which speak only as of the date made.The Company does not
undertake or accept any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements to reflect any change
in their expectations or any change in events, conditions or circumstances on
which any such statement is based.
Additional Information and Where to Find It
Investors, security holders and other interested persons may find additional
information regarding the Company at the SEC's Internet site at
http://www.sec.gov/, or the Company website www.javelinreit.com or by
directing requests to: JAVELIN Mortgage Investment Corp., 3001 Ocean Drive,
Suite 201, Vero Beach, Florida 32963, Attention: Investor Relations.
CONTACT: James R. Mountain
Chief Financial Officer
JAVELIN Mortgage Investment Corp.
JAVELIN Mortgage Investment Corp. Logo
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