[LOGO OF MUNIMAE MUNICIPAL MORTGAGE & EQUITY, LLC]
INFORMATION FOR RELEASE
MuniMae To Acquire Housing and Community Investing Unit of
Lend Lease Real Estate Investments for $102 Million
Combined Company to be Called MMA Financial
Transaction Creates Powerhouse in the Affordable Housing Industry and
Tax Credit Syndication Marketplace
BALTIMORE (May 15, 2003) - Municipal Mortgage & Equity (NYSE: MMA), known as
MuniMae, today announced it has agreed to acquire the Housing and Community
Investing (HCI) unit of Lend Lease Real Estate Investments, a subsidiary of
Australian-based Lend Lease Corporation (ASX: LLC), for a purchase price of $102
million (US) in cash. The newly formed organization, MMA Financial, will combine
HCI, a market leading syndicator of low income housing tax credit equity
investments with MuniMae Midland, a subsidiary of MuniMae and a leading provider
of debt and equity financing for affordable housing. At the close of the
transaction, MMA Financial will manage investments in real estate totaling $7.4
billion, representing approximately 220,000 apartment units, making it the
fourth largest owner of apartments in the United States. The transaction, which
is subject to the customary regulatory approvals, is expected to close in the
third quarter of 2003.
"We are thrilled to welcome HCI as an integral part of MuniMae. HCI is a
terrific company with a clear leadership position in its marketplace," said Mark
K. Joseph, Chairman of the Board and CEO of MuniMae. "MMA Financial overnight
becomes one of the nation's largest and most influential players in the
affordable housing industry, bringing together two of the industry's strongest
and most experienced franchises, which combined can offer clients a unique range
of products and enhanced quality of service. HCI perfectly reinforces our
affordable housing debt financing business as well as complementing our existing
tax credit syndication operation.
"We are excited to gain the proven expertise of HCI's management, many of whom
we have worked with successfully over the years. Because we know the HCI people
well, we know that our two cultures are based on similar values. Both
organizations believe in always delivering what is promised and doing so with
excellent service. We are a good fit and will mesh easily."
The acquisition is expected to be accretive to 2004 earnings on a Cash Available
For Distribution (CAD) basis and dilutive to earnings on a GAAP basis. "Even
before any synergies, this transaction will directly benefit MuniMae
shareholders from a CAD earnings perspective without significantly impacting the
largely tax exempt nature of the MuniMae dividend," Mr. Joseph continued.
HCI provides equity financing for a wide range of affordable housing
developments across the country. Developments include new construction,
substantial rehabilitations, and revitalizations of public housing. HCI
structures and manages low income housing tax credit investments for corporate
investors. As a syndicator of tax credits, HCI sources and acquires deals from
developers, structures the investments and manages the assets in the investment
for the 15-year holding period. HCI currently has approximately $3.8 billion in
equity under management, an excellent track record of investment performance,
and is one of the nation's largest and most experienced sponsors of tax credit
equity investments. The current HCI developer and investor client portfolio has
minimal overlap with MuniMae Midland's existing tax credit equity syndication
business.
In addition to its syndication business, MuniMae Midland also originates,
services and asset manages debt and conventional equity investments in
multifamily housing developments. MuniMae Midland currently manages $3.6 billion
of investments in real estate, including approximately $700 million invested in
tax credit equity.
"MMA Financial will be able to offer increased product and geographic
diversification to equity investors as well as enhanced financing options and
service for developers," said Mike Falcone, MuniMae's President and Chief
Operating Officer. "We intend to immediately combine the organizations upon
completion of the acquisition so as to deliver seamless service to our
customers. Existing leadership from MuniMae and HCI will continue with the
businesses and will maintain their focus on service and performance in all areas
of our business." MMA Financial will be a wholly owned subsidiary of MuniMae and
will be based in Baltimore, Maryland. HCI will be combined with MuniMae
Midland's equity tax credit syndication subsidiary under the leadership of Jenny
Netzer, current Managing Director of HCI. The affordable debt business of MMA
Financial will be led by Keith Gloeckl who has successfully led the investment
operations of MuniMae Midland since the merger of MuniMae and Midland in 1999.
At the close of the transaction, MMA Financial will represent approximately 15%
of the tax credit syndication market with $4.5 billion in tax credit equity and
147,350 tax credit units under management. Upon closing of the transaction,
Jenny Netzer will join the MMA Financial management team as Executive Vice
President. The entire leadership of HCI is expected to join MMA Financial.
"I am very excited to be part of the new MMA Financial team," said Ms. Netzer,
Managing Director of HCI. "Our size and position within the industry will allow
us to enhance client service and gain market share on both the debt and tax
credit equity sides of the affordable housing industry. The integrated business
will retain the best features of both operations, including access by investor
clients to a broad range of well-structured and well-managed investments, and
access by developer clients to a broad range of financing options. I look
forward to working with the team to ensure a smooth integration and an exciting
future for our combined company."
Mr. Falcone also commented, "We expect the addition of HCI to give an important
boost to our debt business. With little overlap in our client base we see
significant opportunity to cross sell the MuniMae Midland debt products to the
HCI developer clients."
In connection with the transaction, MuniMae has received a commitment from RBC
Capital Markets, as lead arranger and sole book runner, for an 18-month, LIBOR
based acquisition facility in the amount of $120 million. MuniMae expects to
draw on this facility in order to finance the transaction and associated working
capital needs. MuniMae expects to repay this facility from the proceeds of an
issuance of common and preferred equity. RBC Capital Markets served as financial
advisor to Municipal Mortgage & Equity on this transaction.
Conference Call and Webcast
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The management teams of MuniMae and HCI will hold a conference call at 9:00 am,
EST today to discuss this announcement with analysts and investors. To listen to
this conference call and participate in the question and answer session,
analysts and investors may dial 877-464-5945, and international parties may dial
706-643-3386. A listen-only live broadcast of the call will also be available by
visiting www.munimaemidland.com or www.mma-financial.com. To listen to the live
call, please logon to the websites at least 15 minutes prior to the start to
register, download and install any necessary audio software. For interested
individuals unable to join the conference call, the call will be archived on
both websites and a replay of the call will be available through Friday, May 23,
2003 at 800-642-1687 (Passcode 741224).
About Municipal Mortgage & Equity
- ---------------------------------
MuniMae and its subsidiaries originate, service and asset manage investments in
multifamily debt and equity for its own account and on behalf of others. Assets
under management total $3.6 billion secured by 910 properties and 97,624 units
in 48 states and the US Virgin Islands. For its proprietary accounts, MuniMae
primarily holds tax-exempt multifamily housing bonds.
This on-balance sheet portfolio of tax-exempt bonds is secured by 145 properties
containing 35,382 units in 27 states. MuniMae participates, for a portion of the
bonds, in the performance of the underlying properties.
MuniMae is organized as a limited liability company, which makes it exempt from
tax at the corporate level and provides the benefit of corporate governance. In
addition, the Company passes through to its shareholders primarily tax-exempt
dividends, which are generated by its municipal bond investments. Dividends to
shareholders are declared quarterly and paid in February, May, August and
November.
About Housing and Community Investment (HCI)
- --------------------------------------------
Housing and Community Investing is a business unit of Lend Lease Real Estate
Investments. HCI is headquartered in Boston and employs 127 people. HCI has over
30 years of experience in affordable housing investing and was one of the first
tax credit syndicators. Originally part of Boston Financial, HCI became part of
Lend Lease in 1999 when Lend Lease acquired Boston Financial.
This press release contains statements which are forward looking in nature and
reflect management's current views with respect to future events and financial
performance. These statements are subject to many uncertainties and risks and
should not be considered guarantees of future performance. This press release
does not constitute an offer to sell any securities of Municipal Mortgage &
Equity, LLC.
Actual results may vary materially from projected results based on a number of
factors, including the actual performance of the properties pledged as
collateral for the portfolio, general conditions in the local real estate
markets in which the properties are located and prevailing interest rates.
MUNIMAE: TAX-EXEMPT DIVIDENDS AND GROWTH THROUGH REAL ESTATE
www.munimaemidland.com / www.mma-financial.com
Contacts
Investors:
MuniMae
Angela Richardson, 888/788-3863
Media:
Sloane & Company
Whit Clay, 212/446-1864