EXHIBIT b(5)
PROJECT GEMSTONE
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Highly Confidential
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Presentation to the Board of Directors
June 25, 1999
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These materials are not intended to constitute an
opinion or appraisal. These materials, which are based
in part on information provided by the Company, are
intended solely to accompany discussion with the Board
of Directors.
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PROJECT GEMSTONE
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TABLE OF CONTENTS
I. Summary of Terms
II. Overview of ICMI
III. Valuation Summary
A. Publicly Traded Companies Implied Valuation
B. Historical Stock Performance
C. Precedent Transactions Premium Analysis
IV. Stand Alone Projections
Appendices
A. Public Companies Analysis
B. Precedent All Cash Transactions Premium Analysis
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I. Summary of Terms
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PROJECT GEMSTONE
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SUMMARY OF TERMS
Transaction Overview
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Transaction Structure: Pursuant to a final definitive
agreement (the "Agreement"),
Imperial Credit Commercial
Mortgage Investment Corp ("ICMI")
will merge with a direct or
indirect subsidiary of Imperial
Credit Industries Inc. ("ICII")
for consideration of $11.50 cash
per share of ICMI common stock
(the "Transaction").
Implied ICMI Equity Value: $327.75 million ($11.50 per
share) based on ICMI shares
outstanding of 28.5 million.
Shop Provision: For a period of sixty days
following the date of the
definitive agreement, ICMI will
be permitted to solicit competing
transactions and to terminate the
Agreement in favor of a bona fide
alternative transaction
determined by ICMI, after
consulting with its financial and
legal advisors, as more favorable
("Superior Proposal").
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PROJECT GEMSTONE
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SUMMARY OF TERMS
Transaction Overview
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ICMI Stock Options: All ICMI stock options will be
converted to ICII stock options
at strike prices to be
determined in accordance with
Black-Scholes option pricing
techniques. Alternatively,
within 90 days following the
effective date of the Merger,
ICMI option holders will be
accorded the right to receive
cash equal to (a) the "in-the-
money" cash value for options
with strike prices less than
$11.50 per share and (b) the
option value as determined by
Black-Scholes pricing techniques
for "out-of-money" options.
Option holders who do not
continue as employees of ICII
will have one year to exercise
their options.
SPB Loans: ICII will agree to purchase from
ICMI any remaining SPB loans
submitted to SPB for repurchase
that remain outstanding as of
June 30, 1999.
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PROJECT GEMSTONE
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SUMMARY OF TERMS
Transaction Overview
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External Management Contract: Imperial Credit Commercial Asset
Management Corp.("ICCAMC"), a
wholly owned subsidiary of
Imperial Credit Industries, Inc.
("ICII") currently has an
external management contract with
ICMI that, pursuant to the
Transaction will be independently
appraised according to the
procedure set forth for
nonrenewal. Should the
appraisal result in a contract
value less than $35 million, then
ICMI shareholders shall receive an
adjusted purchase price per share
equal to $11.50 per share plus $35
million less the appraised amount
divided by the number of ICMI
shares outstanding. Should ICMI
terminate the definitive agreement
in favor of a Superior Proposal,
ICMI will be obligated to pay
ICCAMC a contract termination
amount determined by the above
appraisal process, not to exceed
$35 million.
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PROJECT GEMSTONE
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SUMMARY OF TERMS
Transaction Overview
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Conditions to Closing: Conditions to closing include, among
other things: (i) approval of the
Transaction by ICMI shareholders,
(ii) no regulatory impediment,
(iii) no material breach of
representations or warranties
(including receipt of fairness opinion
from ICMI's financial advisor), and
(iv) each obligation of the parties
to the Transaction have been
performed.
Fiduciary Obligations: ICMI's Board may respond to
unsolicited bids and allow due
diligence with respect to such
competing bids if required by
fiduciary duties.
Termination: The Agreement may be terminated:
(a) by mutual consent;
(b) by either party if a regulatory
body impedes the Transaction;
(c) by ICMI if the ICMI Board accepts
a Superior Proposal;
(d) by ICII if the ICMI Board accepts
a Superior Proposal; and
(e) by either party if the other
party materially breaches a
representation of warranty.
Expense Reimbursement: Upon termination of the definitive
agreement in favor of a Superior
Proposal, ICMI will reimburse ICII's
out-of-pocket expenses (including
investment banking fees) not to
exceed $2.0 million.
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PROJECT GEMSTONE
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SUMMARY OF TERMS
Summary of Implied Multiples
($ in thousands, except per share data)
----------------------------------------------------
Offer Price per Share $ 11.50
Shares Outstanding 28,500
Equity Purchase Price $327,750
----------------------------------------------------
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Results of Implied
ICMI Operations Multiple
---------------------------------------- ---------- --------
Latest Quarter Annualized FFO $ 34,744 9.4x
Latest Quarter Annualized Net Income $ 31,580 10.4x
Equity Book Value $ 403,476 0.8x
Projected 1999 EPS/(1)/ $ 1.17 9.8x
Projected 2000 EPS/(1)/ $ 1.35 8.5x
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(1) Estimates provided by First Call.
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PROJECT GEMSTONE
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II. Overview of ICMI
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PROJECT GEMSTONE
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OVERVIEW OF ICMI
Assets as of 3/31/99
($ in thousands)
- --------------------------------------------------------------------------------
ICMI
-----------------------
Cash and cash equivalents $ 28,015 3.9%
Mortgage loans, net 513,944 72.2%
Real property 105,691 14.8%
Other securities 55,910 7.9%
Other assets 8,548 1.2%
--------- ------
$ 712,108 100.0%
ICMI Asset Allocation
- ---------------------
[PIE CHART APPEARS HERE]
Real property 14.8%
Other securities 7.9%
Other assets 1.2%
Cash and cash equivalents 3.9%
Mortgage loans, net 72.2%
- --------------------------------------------------------------------------------
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PROJECT GEMSTONE
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OVERVIEW OF ICMI
Summary Capital Stock and Performance Data
(In thousands except %, ratios and per share amounts)
- ----------------------------------------------------------- ---------------------------------------------------------------------
Ticket/Exchange ICMI-Nasdaq Shares Percentage
------ ----------
Fully Diluted Shares Outstanding 28,500 Shares Held By Insiders 3,363 11.8%
Stock Price as of 6/21/99 $ 10,906 Shares Held By Institutions 16,372 57.4%
Equity Market Value $ 310,828 Shares Held By Public 8,765 30.8%
-------- ------
Total Shares 28,500 100.0%
Debt $ 292,754
Total Market Capitalization $ 603,582 Average Daily Trading Volume 206
Debt/Total Market Capitalization 48.50% % Total Shares Traded Daily 0.7%
Actual
Indicated Dividend (Annualized) $ 1.20 Q1 99 Q1 Annualized 1998
------- ------------- ------
Dividend Yield 11.00% Revenue $17,574 $70,296 $ 57,421
FFO, as adjusted 8,686/(1)/ 34,744/(1)/ 36,512/(2)/
Equity Book Value $ 403,476 Net Income, as adjusted 7,895/(1)/ 31,580/(1)/ 34,757/(2)/
Equity Market/Book Value 0.07x
Total Assets $712,108
Shareholders' Equity (Book) $403,476
- ----------------------------------------------------------- ---------------------------------------------------------------------
(1) Includes first quarter adjustments of (i) addition of $3 million for loan
loss provisions and (ii) $791,000 for depreciation of real property
(excluded from net income)
(2) Includes adjustments of (i) additions of $4.554 million from writedown of
securities available for sale; (ii) addition of $6.3 million for loan loss
provisions; (iii) $1.755 million for depreciation of real property
(excluded from net income); and (iv) addition of $1.659 million from
extraordinary due diligence expenses.
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PROJECT GEMSTONE
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OVERVIEW OF ICMI
Balance Sheet Summary (as of 3/31/99)
- -------------------------------------------------------------------------------------------------------------
($ in thousands)
Cash & cash equivalents $ 28,015 Dividends payable $ 8,550
Mortgage loans, net 513,944 Accrued expenses and other 7,328
Real property, net 105,691 CMO Debt 245,381
Securities available for sale 55,910 Mortgage loans 47,373
---------
Accrued interest receivables 4,447 Total liabilities 308,632
Other assets 4,101 Shareholders' equity 403,476
--------- ---------
Total assets $ 712,108 Total liab. & shareholders' equity $ 712,108
========= =========
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PROJECT GEMSTONE
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OVERVIEW OF ICMI
Institutional Holdings
(in thousands)
- --------------------------------------------------------------------------------
ICMI Shares % of
Institution Held Total
- ----------- ---- -----
Fund Asset Management Inc. (Merrill Lynch) 3,266 11.5%
Friedman, Billings, Ramsey Investment Management, Inc. 1,143 4.0%
Capital Guardian Trust Company 1,100 4.0%
Oppenheimer Management Corporation 1,030 3.6%
Eubel Brady & Suffman Asset Management, Inc. 1,017 3.6%
Granite Capital International Group 994 3.5%
Boston Partners Asset Management, L.P. 938 3.3%
Capital Research and Management Company 900 3.2%
Weitz (Wallace) R. & Company 766 2.7%
Corbyn Investment Management Inc. 762 2.7%
Morgan (J.P.) & Company Incorporated 416 1.5%
Pilgrim America Investment, Inc. 314 1.1%
Scudder Kemper Investments, Inc. 312 1.1%
All Other Institutions as a Group (38) 3,414 12.0%
------- ---------
Total Institutional 16,372 57.4%
Imperial Credit Industries Inc. 3,070 10.8%
Insiders 293 1.0%
Public 8,765 30.8%
------- ---------
Total 28,500 100.0%
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Latest reported holdings (Vickers and CDA/Spectrum) as of June 21, 1999.
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PROJECT GEMSTONE
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OVERVIEW OF ICMI
ICMI Relative Stock Price Performance
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[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
_______ Imperial Cr Coml Mtg Invt Co (100=$9.375)
_______ S&P 500 (100=1229.230)
_______ Mortgage REIT Index (100=$5.722)
_______ Amex Morgan Stanley Reit Index (100=302.360)
Mortgage REIT Index is composed of: AMCT, AHR, CHAS, CLR, CMM, ICH,
OAC, PCC, RAS and WREI
Source: IDD Information Services/Tradeline
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PROJECT GEMSTONE
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OVERVIEW OF ICMI
LTM Price % Change
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Current Stock 52 Week % Change from
-------------------------
Company Price /(1)/ High Low 52 Week High
- ----------------- --------------- ------------------------- ----------------
PMC Commercial Trust $14.94 $18.88 $13.06 (20.9%)
- --------------------------------------------------------------------------------------------------------------------------
Imp. Credit Comm. Mortg. Invest. Corp. 10.91 13.94 6.50 (21.7%)
- --------------------------------------------------------------------------------------------------------------------------
Amresco Capital Trust 9.44 13.50 5.88 (30.1%)
Resource Asset Investment Trust 12.56 19.00 8.63 (33.9%)
Anthracite Capital Inc. 7.00 14.13 3.63 (50.4%)
Chastain Capital Corp. 6.63 13.88 2.50 (52.3%)
Clarion Commercial Holding Inc. 7.00 17.13 1.88 (59.1%)
IMPAC Commercial Holdings 6.31 15.63 1.88 (59.6%)
Starwood Financial Trust 31.63 80.25 29.00 (60.6%)
Ocwen Asset Investment Corp. 5.13 17.00 2.50 (69.9%)
Wilshire Real Estate Investment Trust Inc. 4.00 17.38 2.06 (77.0%)
CRIIMI MAE 2.25 15.00 0.81 (85.0%)
---------------------------------------
Mean (51.7%)
---------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
(1) As of 6/21/99.
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PROJECT GEMSTONE
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OVERVIEW OF ICMI
LTM ICMI Traded Volume
Percent of Total Volume Traded at Specified Prices
ICMI's current stock price as of 6/21/99 is $10,906.
[GRAPH APPEARS HERE]
$6-$7 $7-$8 $8-$9 $9-$10 $10-$11 $11-$12 $12-$13 $13-$14
1.28 3.21 19.45 29.10 36.08 0.00 4.35 6.53
DAILY CLOSING PRICE
June 22, 1998 to June 21, 1999
-----------------------------------------------------
Graph shows 73,848,400 cumulative shares, 259% of the
28,500,000 outstanding shares.
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Source: IDD Information Services/Tradeline
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PROJECT GEMSTONE
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_______________________________
III. Valuation Summary
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PROJECT GEMSTONE
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A. Publicly Traded Companies
Implied Valuation
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PROJECT GEMSTONE
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PUBLICLY TRADED COMPANIES IMPLIED VALUATION
Multiples Based on Publicly Traded Companies*
[BAR CHART APPEARS HERE]
LQA P/FFO(1) LQA P/E(2) P/1999E EPS(3) P/2000E EPS (3) Price/Book(4)
3.3x 3.4x 4.8x 4.9x 0.5x
5.7x 6.1x 6.8x 6.2x 0.7x
7.6x 9.3x 9.8x 7.9x .8x
9.4x 10.4x 10.9x 8.5x 1.0x
* Line represents offer price of $11.50 per ICMI share applied to ICMI
historical results.
Box plot represents high, low and mean statistics for publicly traded
companies, excluding ICMI.
See Appendix, for Publicly Traded Companies.
(1) Most recent stock price/list quarter 1999 adjusted net income annualized
plus adjusted LTM depreciation.
(2) Most recent stock price/list quarter 1999 adjusted earnings annualized
("Latest Quarter Annualized")
(3) Price to earnings estimated provided by First Call.
(4) Most recent stock price/book equity as of 3/31/99.
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PROJECT GEMSTONE
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PUBLICLY TRADED COMPANIES IMPLIED VALUATION
Relative Performance Rankings
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Capitalization
- --------------------------------------------------------------------------------
=========================================================== ==========================================================
Total Market Cap. ($ in thousands) Equity Market Capitalization ($ in thousands)
=========================================================== ==========================================================
Starwood Financial Trust $3,038,187 Starwood Financial Trust $1,866,056
----------------------------------------------------------
CRIIMI MAE 1,221,957 Imp. Credit Comm. Mortg. Invest. Corp.- Offer 327,750
----------------------------------------------------------
Ocwen Asset Investment Corp. 715,286 Imp. Credit Comm. Mortg. Invest. Corp. 310,828
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Imp. Credit Comm. Mortg. Invest. Corp.- Offer 620,504 Anthracite Capital Inc. 146,988
--------------------------------------------------------
Imp. Credit Comm. Mortg. Invest. Corp. 603,582 CRIIMI MAE 143,045
Anthracite Capital Inc. 479,872 Ocwen Asset Investment Corp. 106,465
IMPAC Commercial Holdings 389,971 PMC Commercial Trust 97,495
Wilshire Real Estate Investment Trust Inc. 301,640 Amresco Capital Trust 94,433
Resource Asset Investment Trust 210,625 Resource Asset Investment Trust 77,452
PMC Commercial Trust 203,697 IMPAC Commercial Holdings 53,140
Amresco Capital Trust 141,771 Chastain Capital Corp. 48,672
Clarion Commercial Holding Inc. 138,766 Wilshire Real Estate Investment Trust Inc. 46,000
Chastain Capital Corp. 57,172 Clarion Commercial Holding Inc. 30,296
-------------------------------------------------- -------------------------------------------------
Mean /(1)/ $ 627,177 Mean /(1)/ $ 246,368
-------------------------------------------------- -------------------------------------------------
=========================================================== ==========================================================
(1) Mean calculation excludes ICMI and ICMI-Offer.
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PROJECT GEMSTONE
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PUBLICLY TRADED COMPANIES IMPLIED VALUATION
Relative Performance Rankings
- --------------------------------------------------------------------------------
Leverage and Price/Book
- --------------------------------------------------------------------------------
============================================================== =================================================================
Leverage (Total Debt to Total Market Cap.) Price/Book/(1)/
============================================================== =================================================================
CRIIMI MAE 88.3% Starwood Financial Trust 1.87x*
IMPAC Commercial Holdings 86.4% PMC Commercial Trust 1.05
Ocwen Asset Investment Corp. 85.1% Resource Asset Investment Trust 0.91
Wilshire Real Estate Investment Trust Inc. 84.8% Chastain Capital Corp. 0.84
----------------------------------------------------------------
Clarion Commercial Holding Inc. 78.2% Imp. Credit Comm. Mortg. Invest. Corp.- Offer Price 0.81
----------------------------------------------------------------
Anthracite Capital Inc. 69.4% Anthracite Capital Inc. 0.81
Resource Asset Investment Trust 63.2% Clarion Commercial Holding Inc. 0.75
PMC Commercial Trust 52.1% Imp. Credit Comm. Mortg. Invest. Corp. 0.77
Imp. Credit Comm. Mortg. Invest. Corp. 48.5% Amresco Capital Trust 0.72
- -------------------------------------------------------------
Imp. Credit Comm. Mortg. Invest. Corp.- Offer Price 47.2% Wilshire Real Estate Investment Trust Inc. 0.59
- -------------------------------------------------------------
Starwood Financial Trust 38.6% IMPAC Commercial Holdings 0.52
Amresco Capital Trust 33.4% Ocwen Asset Investment Corp. 0.48
Chastain Capital Corp. 14.9% CRIIMI MAE 0.29x*
-------------------------------------------------- -----------------------------------------------------
Mean/(2)/ 63.1% Mean/(2)/ 0.74x
-------------------------------------------------- -----------------------------------------------------
============================================================== =================================================================
/(1)/ Reflects most recent stock price multiplied by 3/31/99 outstanding
shares/(3/31/99 Book Equity).
/(2)/ Mean calculation excludes ICMI, ICMI-Offer and indicated outliers(*).
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PROJECT GEMSTONE
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PUBLICLY TRADED COMPANIES IMPLIED VALUATION
Relative Performance Rankings
- ------------------------------------------------------------------------------------------------------------------------------------
Valuation Multiples
- ------------------------------------------------------------------------------------------------------------------------------------
=============================================== ======================================== =========================================
Stock Price / LTM FFO Stock Price / 1999E EPS Stock Price / 2000E EPS
=============================================== ======================================== =========================================
-----------------------------------------
Wilshire Real Estate Investment Trust Imp. Credit Comm. Mortg. Invest.
Inc. 17.5x* IMPAC Commercial Holdings 10.9x Corp.- Offer Price 8.5x
- ----------------------------------------------- ---------------------------------------- -----------------------------------------
Imp. Credit Comm. Mortg. Invest. Imp. Credit Comm. Mortg. Invest. Imp. Credit Comm. Mortg. Invest.
Corp.- Offer Price 15.0 Corp.- Offer Price 9.8 Corp. 8.1
- ----------------------------------------------- ----------------------------------------
Imp. Credit Comm. Mortg. Invest. Corp. 14.2 Imp. Credit Comm. Mortg. Invest. IMPAC Commercial Holdings 7.9
Corp. 9.3
Ocwen Asset Investment Corp. 7.6 PMC Commercial Trust 8.5 PMC Commercial Trust 7.6
Resource Asset Investment Trust 6.9 Wilshire Real Estate Investment Amresco Capital Trust 5.5
Trust Inc. 7.4
Anthracite Capital Inc. 6.6 Anthracite Capital Inc. 6.5 Resource Asset Investment Trust 5.3
Amresco Capital Trust 6.4 Amresco Capital Trust 6.2 Clarion Commercial Holding Inc. 4.9
PMC Commercial Trust 5.5 Resource Asset Investment Trust 5.5 Anthracite Capital Inc. N/A
CRIIMI MAE 5.3 Clarion Commercial Holding Inc. 5.0 Chastain Capital Corp. N/A
Starwood Financial Trust 4.3 Ocwen Asset Investment Corp. 4.8 CRIIMI MAE N/A
IMPAC Commercial Holdings 3.3 Chastain Capital Corp. N/A Ocwen Asset Investment Corp. N/A
Chastain Capital Corp. 2.7* CRIIMI MAE N/A Starwood Financial Trust N/A
Clarion Commercial Holding Inc. NM Starwood Financial Trust N/A Wilshire Real Estate Investment
Trust Inc. N/A
------------------------------------------ ---------------------------------- --------------------------------
Mean/(1)/ 5.7x Mean/(1)/ 6.8x Mean/(1)/ 6.2x
------------------------------------------ ---------------------------------- --------------------------------
=============================================== ======================================== =========================================
(1) Mean calculation excludes ICMI, ICMI-Offer and indicated outliners(*).
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PROJECT GEMSTONE
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PUBLICLY TRADED COMPANIES IMPLIED VALUATION
Relative Performance Rankings
- --------------------------------------------------------------------------------
Performance Ratios
- --------------------------------------------------------------------------------
============================================================ ============================================================
Latest Quarter Return on Equity/(1)/ Dividend Yield/(2)/
============================================================ ============================================================
Clarion Commercial Holding Inc. 17.6% Resource Asset Investment Trust 16.2%
Anthracite Capital Inc. 14.9% Anthracite Capital Inc. 16.6%
Resource Asset Investment Trust 13.8% Amresco Capital Trust 15.3%
Ocwen Asset Investment Corp. 13.1% Clarion Commercial Holding Inc. 13.1%
CRIIMI MAE 11.7% PMC Commercial Trust 12.2%
PMC Commercial Trust 11.1% Imp. Credit Comm. Mortg. Invest. Corp. 11.0%
------------------------------------------------------------
Chastain Capital Corp. 11.1% Imp. Credit Comm. Mortg. Invest. Corp.- Offer Price 10.4%
------------------------------------------------------------
Amresco Capital Trust 10.9% IMPAC Commercial Holdings 6.3%
Starwood Financial Trust 9.1% Starwood Financial Trust 5.3%
Wilshire Real Estate Investment Trust Inc. 9.0% CRIIMI MAE N/A
- ------------------------------------------------------------
Imp. Credit Comm. Mortg. Invest. Corp.- Offer Price 7.8% Wilshire Real Estate Investment Trust Inc. N/A
- ------------------------------------------------------------
Imp. Credit Comm. Mortg. Invest. Corp. 7.8% Ocwen Asset Investment Corp. N/A
IMPAC Commercial Holdings -0.9% Chastain Capital Corp. N/A
------------------------------------------------------- --------------------------------------------------------
Mean/(3)/ 11.0% Mean/(3)/ 12.1%
------------------------------------------------------- --------------------------------------------------------
============================================================ ============================================================
(1) Represents Q1 1999 annualized adjusted net income (3/31/99 Book Equity).
(2) Reflects Q1 1999 annualized dividend/(most recent stock price).
(3) Mean calculation excludes ICMI, and ICMI-Offer.
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_____________________________________
B. Historical Stock Performance
_____________________________________
PROJECT GEMSTONE
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HISTORICAL STOCK PERFORMANCE
ICMI Stock Price vs. $11.50: IPO to 6/21/99
[GRAPH APPEARS HERE]
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PROJECT GEMSTONE
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_________________________________
C. Precedent Transactions Premium
Analysis
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PROJECT GEMSTONE
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PRECEDENT TRANSACTIONS PREMIUM ANALYSIS*
- --------------------------------------------------------------------------------
-------------------------------------------
Purchase Price per Share: $11.50
Assumed Offering Date /(1)/ May 13, 1999
LTM Earnings per Share $ 0.62
-------------------------------------------
Implied Multiple
Stock Price ----------------
-------------------------------------------------------- Price/LTM
One Day Prior One Week Prior Four Weeks Prior Actual EPS
------------- -------------- -------------------
ICMI $9.94 $9.25 $9.13
Premium (Discount) to Purchase Price per Share:
-------------------------------------------------------------------------------------------------------------
Cash Offer 15.7% 24.3% 26.0% 18x
-------------------------------------------------------------------------------------------------------------
Precedent Transactions Premium (Discounts) to
Purchase Price per Share:
-------------------------------------------------------------------------------------------------------------
Mean: Precedent Transactions 9.0% /(2)/ 7.8% /(2)/ 7.8% /(2)/ 19.5x /(3)/
-------------------------------------------------------------------------------------------------------------
* See Appendix for Precedent Transactions.
Precedent Transactions include transactions meeting the following criteria:
(i) acquired company operating as a REIT or Financial Services Company, (ii)
transactions announced in 1996 or later, (iii) acquired company with book
equity value between $200 million and $1.5 billion.
(1) Assumed Offering Date of May 13, 1999 reflects date of initial ICII public
offer of $11.00 per share.
(2) Historical stock price information from Bloomberg.
(3) Historical precedent transactions' equity value and net income provided by
Securities Data Company, Inc.
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_______________________________
IV. Stand Alone Projections
_______________________________
PROJECT GEMSTONE
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STAND-ALONE PROJECTIONS
Methodology and Assumptions
Pro Forma
. Assumes the remarking of ICMI assets to fair market value
. Assumes the put-back of SPB and FMAC securities and the Hayes Park principal
repayment.
Projections
. Principal business activities during projection period include
. Small loan first mortgage pool acquisitions
. Real property acquisitions
. Mezzanine lending
. Small loan first mortgage pool securitizations
. Business activities primarily financed through
. Secured warehouse facility for small loan acquisitions
. First mortgage debt for real property acquisitions
. Equity financing from available cash resources for mezzanine lending and
retained CMBS investments
. Projections assume no incremental equity capital raised during the
presentation period
. Stock price equals equity book value per share by end of projection period
. Dividends grow at 5% per year
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PROJECT GEMSTONE
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STAND-ALONE PROJECTIONS
Comparison of Offer vs. Stand-Alone Cash Flows
- --------------------------------------------------------------------------------
- --------------------------------------------
Assumptions
- --------------------------------------------
Stand-Alone Discount Rate 15.0%
Terminal Value (% of Bk Val-ICMI) 100.0%
- ---------------------------------------------
Year 1 Year 2
----------------------------------- -----------------------------------
Stand-Alone Cashflows
Dividends 8,550 8,550 8,550 8,550 8,978 8,978 8,978 8,978
Terminal Value - - - - - - - -
------- ------- ------- ------- ------- ------- ------- -------
Total Stand-Alone Cashflows 8,550 8,550 8,550 8,550 8,978 8,978 8,978 8,978
ICMI NPV 309,138
NPV per share $ 10.85
Year 3 Year 4
----------------------------------- -----------------------------------
Stand-Alone Cashflows
Dividends 9,426 9,426 9,426 9,426 9,898 9,898 9,898 9,898
Terminal Value - - - - - - - 361,803
------- ------- ------- ------- ------- ------- ------- -------
Total Stand-Alone Cashflows 9,426 9,426 9,426 9,426 9,898 9,898 9,898 371,701
ICMI NPV
NPV per share
- --------------------------------------------------------------------------------
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PROJECT GEMSTONE
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STAND-ALONE PROJECTIONS
Projected Balance Sheet
(in thousands)
ICMI-Std-Alone
-------------- -----------------------------------------------------
Q1
1999 Adj. Year 1 Year 2 Year 3 Year 4
-------------- -----------------------------------------------------
Assets
Cash and Interest Bearing Deposits $ 116,539 $ 37,279 $ 36,537 $ 15,273 $ 1,569
Mortgage Loans, net 397,606 687,189 547,803 427,898 301,553
Total Real Property, net 101,645 129,351 156,426 182,722 208,239
Total Securities Available for Sale 48,710 48,710 87,320 125,930 164,540
Other Assets 8,548 9,807 10,994 11,712 13,038
----------- ----------- ------------ ---------- -----------
Total Assets $ 673,048 $ 912,335 $ 839,081 $ 763,535 $ 688,939
=========== =========== ============ ========== ===========
Liabilities & Stockholders' Equity
CMO Debt $ 245,381 $ 195,197 $ 153,775 $ 119,585 $ 91,365
Other Long-Term Debt - 278,989 247,231 207,185 163,122
Mortgage Loans Secured by Real Property (Existing) 47,373 56,940 56,472 55,968 55,424
Accrued Expenses, Payables and Other Liabilities 15,878 15,878 16,306 16,754 17,226
----------- ----------- ------------ ---------- -----------
Total Liabilities 308,632 547,004 473,783 399,492 327,136
Total Stockholders' Equity 364,416 365,331 365,298 364,043 361,803
----------- ----------- ------------ ---------- -----------
Total Liabilities & Stockholders' Equity $ 673,048 $ 912,335 $ 839,081 $ 763,535 $ 688,939
=========== =========== ============ ========== ===========
Common Shares Outstanding 28,500 28,500 28,500 28,500 28,500
Book Value per Share $ 12.79 (1) $ 12.82 $ 12.82 $ 12.77 $ 12.69
____________________
(1) Marked-to-market values.
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STAND-ALONE PROJECTIONS
Projected Income Statement
(in thousands) ICMI Std-Alone
------------ ------------------------------------------------------------
Annual Adj-
1999 Year 1 Year 2 Year 3 Year 4
------------ ------------------------------------------------------------
Mortgage Loans $ 40,497 $ 53,577 $ 56,658 $ 50,536 $ 47,005
Securities 6,228 6,448 9,332 12,794 16,225
Real Estate 14,172 16,955 21,905 27,009 32,270
Other 5,721 4,030 (2,419) (1,941) (2,614)
---------- ---------- ---------- ---------- ----------
Total Revenue 66,618 81,009 85,477 88,398 92,916
Management Fees 7,468 8,004 8,959 8,946 8,653
Interest Expense 18,896 24,291 26,493 26,963 27,741
Other 10,848 13,599 14,149 16,039 19,171
---------- ---------- ---------- ---------- ----------
Total Expenses 37,212 45,894 49,600 51,948 55,565
---------- ---------- ---------- ---------- ----------
Net Earnings $ 29,406 $ 35,115 $ 35,877 $ 36,450 $ 37,351
========== ========== ========== ========== ==========
FFO $ 32,570 $ 38,570 $ 39,982 $ 41,355 $ 43,056
========== ========== ========== ========== ==========
Diluted Earnings per Share $ 1.03 $ 1.23 $ 1.26 $ 1.28 $ 1.31
Diluted FFO per Share $ 1.14 $ 1.35 $ 1.40 $ 1.45 $ 1.51
FFO Annual Growth Rate 18.4% 3.7% 3.4% 4.1%
4 Year FFO Compounded Annual Growth Rate 7.23%
Dividends $ 34,200 $ 34,200 $ 35,910 $ 37,706 $ 39,591
Dividends per Share $ 1.20 $ 1.20 $ 1.26 $ 1.32 $ 1.39
FFO Payout Ratio 105.0% 88.7% 89.8% 91.2% 92.0%
Diluted Common Shares O/S 28,500 28,500 28,500 28,500 28,500
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PROJECT GEMSTONE
================================================================================
STAND-ALONE PROJECTIONS
Cash Flow Statement
(in thousands)
-------------------------------------------------------
Year 1 Year 2 Year 3 Year 4
-------------------------------------------------------
Cash Flow from Operating Activities
Net Earnings $ 35,115 $ 35,877 $ 36,450 $ 37,351
Depreciation and Amortization 3,455 4,105 4,905 5,705
Other 203 (451) 15 (520)
---------- ---------- ---------- ----------
Total Cash Provided (Used) by Operating Activities $ 38,773 $ 39,531 $ 41,370 $ 42,536
Cash Flow from Investing Activities
Proceeds from Securitization of SPB Loans $ - $ 297,000 $ 297,000 $ 297,000
Investment in Assets, net (332,841) (239,262) (258,078) (250,231)
Other Capital Expenditures (1,161) (1,180) (1,201) (1,222)
---------- ---------- ---------- ----------
Total Cash Provided (Used) for Investing Activities $ (322,204) $ 69,286 $ 49,811 $ 56,178
Cash Flow from Financing Activities
Dividends Paid (34,200) (35,910) (37,706) (39,591)
Cash Borrowings (Payments) 238,371 (73,648) (74,740) (72,827)
---------- ---------- ---------- ----------
Total Cash Provided (Used) by Financing Activities $ 204,171 $ (109,558) $ (112,445) $ (112,418)
Net Increase (Decrease) in Cash and Cash Equivalents $ (79,260) $ (741) $ (21,264) $ (13,704)
========== ========== ========== ==========
Cash and Cash Equivalents at Beginning of Period $ 116,539 $ 37,279 $ 36,537 $ 15,273
========== ========== ========== ==========
Cash and Cash Equivalents at End of Period $ 37,279 $ 36,537 $ 15,273 $ 1,569
========== ========== ========== ==========
33