American Mortgage receives margin calls, remains hampered by market volatility

By Lisa Kerner

Charlotte, N.C., Dec. 7 - American Mortgage Acceptance Co. said it has received margin calls on some of its repurchase facilities and interest rate derivative contracts.

The company cited widening credit spreads on some of its assets and a decline in yields on U.S. Treasury securities as factors leading to the margin calls.

To meet the margin calls and increase liquidity for future cash needs, American Mortgage sold its remaining Fannie Mae and Ginnie Mae debt securities as well as two commercial mortgage-backed securities. The sales resulted in $12.5 million in realized losses.

American Mortgage withdrew its previous guidance of $0.95 to $1.00 of adjusted funds from operations per share for 2007, according to a company news release.

In addition, the board of trustees will not declare a fourth-quarter dividend payment for the company's common stock.

American Mortgage's board did, however, declare a dividend distribution of $0.453 per share for its 7.25% series A cumulative convertible preferred shares payable on Jan. 15. The record date for the payment is Dec. 31.

"While the credit quality of our portfolio remains stable, severe market volatility continues its negative impact on the value of our assets and our short-term liquidity," chief executive officer J. Larry Duggins stated in the release.

"We may need to sell additional assets to meet future margin calls and maintain adequate liquidity, which could lead to future losses."

American Mortgage is a New York-based real estate investment trust.

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