Capstead Mortgage Corporation Announces Redemption of $1.26 Cumulative Convertible Preferred Stock, Series B

  Capstead Mortgage Corporation Announces Redemption of $1.26 Cumulative
  Convertible Preferred Stock, Series B

Business Wire

DALLAS -- May 13, 2013

Capstead Mortgage Corporation (NYSE: CMO) (“Capstead” or the “Company”) today
announced the redemption of all 16,493,110 outstanding shares of its $1.26
Cumulative Convertible Preferred Stock, Series B (“Series B Preferred Stock”).
The redemption date will be June 13, 2013, and the redemption price will be
$12.50 per share of Series B Preferred Stock plus accrued and unpaid monthly
dividends for the period from June 1, 2013 through the day prior to the
redemption date in an amount equal to $0.042 per share, for a total payment
per share of $12.542. The redemption price will be paid by the Company from
the proceeds from its recently completed offering of its 7.50% Series E
Cumulative Redeemable Preferred Stock and cash on hand. On and after the
redemption date, the Series B Preferred Stock will no longer be deemed
outstanding, and all rights of the holders of these shares will terminate
including the right to receive monthly dividends.

A notice of redemption will be mailed to Series B Preferred Stock holders of
record on May 13, 2013. Any questions relating to the notice of redemption
should be addressed to Wells Fargo Shareowner Services, the redemption and
paying agent, at:

Wells Fargo Shareowner Services
PO Box 64874
St. Paul, Minnesota 55164
Domestic calls: 1-800-401-1957
International calls: Visit website for international access codes
https://www.shareowneronline.com/UserManagement/ContactUs.aspx

Holders of the Series B Preferred Stock have the right to convert, upon
surrender of their shares before the close of business, Eastern Daylight Time,
on June 6, 2013 any or all of their shares of Series B Preferred Stock into
shares of Capstead’s common stock, at a conversion rate of 0.6407 shares of
common stock for each share of Series B Preferred Stock. However, based on the
$13.01 closing price of the common stock on May10, 2013 it is not
economically advantageous to do so, and management strongly discourages
holders of the Series B Preferred Stock from exercising their conversion
right. Should any shares of Series B Preferred Stock be converted into shares
of common stock, cash will be paid in lieu of fractional shares. It is
expected that all or nearly all shares of the Series B Preferred Stock will be
redeemed rather than converted. This will result in a one-time decrease in net
income available to common stockholders of up to $19.8million. This amount
represents the aggregate Series B Preferred Stock redemption price of
$206.2million ($12.50 per share of Series B Preferred Stock) less the
$186.4million recorded value of these shares ($11.30 per share of Series B
Preferred Stock).

Capstead is a self-managed real estate investment trust (a “REIT”) for federal
income tax purposes. The Company earns income from investing in a leveraged
portfolio of residential adjustable-rate mortgage pass-through securities,
referred to as ARM securities, issued and guaranteed by government-sponsored
enterprises, either Fannie Mae or Freddie Mac, or by an agency of the federal
government, Ginnie Mae.

            Cautionary Note Concerning Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include, without limitation, any statement that may predict, forecast,
indicate or imply future results, performance or achievements, and may contain
the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “will be,”
“will likely continue,” “will likely result,” or words or phrases of similar
meaning. Forward-looking statements are based largely on the expectations of
management and are subject to a number of risks and uncertainties including,
but not limited to, the following:

  *changes in general economic conditions;
  *fluctuations in interest rates and levels of mortgage prepayments;
  *the effectiveness of risk management strategies;
  *the impact of differing levels of leverage employed;
  *liquidity of secondary markets and credit markets;
  *the availability of financing at reasonable levels and terms to support
    investing on a leveraged basis;
  *the availability of new investment capital;
  *the availability of suitable qualifying investments from both an
    investment return and regulatory perspective;
  *changes in legislation or regulation affecting exemptions for mortgage
    REITs from regulation under the Investment Company Act of 1940;
  *changes in legislation or regulation affecting Fannie Mae, Freddie Mac,
    Ginnie Mae and similar federal government agencies and related guarantees;
  *deterioration in credit quality and ratings of existing or future
    issuances of mortgage securities guaranteed by Fannie Mae, Freddie Mac or
    Ginnie Mae; and
  *increases in costs and other general competitive factors.

In addition to the above considerations, actual results and liquidity are
affected by other risks and uncertainties which could cause actual results to
be significantly different from those expressed or implied by any
forward-looking statements included herein. It is not possible to identify all
of the risks, uncertainties and other factors that may affect future results.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed herein may not occur and actual results could differ
materially from those anticipated or implied in the forward-looking
statements. Forward-looking statements speak only as of the date the statement
is made and the Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

Contact:

Capstead Mortgage Corporation
Investor Relations:
Lindsey Crabbe, 214-874-2339
 
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