MuniMae suspends quarterly dividend distribution to conserve capital amid market dislocation

By Caroline Salls

Pittsburgh, May 5 - Municipal Mortgage & Equity, LLC has decided to suspend its quarterly dividend distribution in an effort to conserve capital to protect the long-term prospects of the business given the dislocation of the credit and debt capital markets and its impact on MuniMae's business, according to a company news release.

MuniMae said market conditions have had a direct effect not only on some of its assets, but also on financial institutions and other entities with which the company does business, which has affected their willingness to participate in the company's activities as equity investors, lenders or otherwise.

The combination of reduced investor interest and reduced liquidity resulting from these circumstances has led MuniMae to significantly curtail its business, the release said.

However, MuniMae said it continues to invest in and operate some businesses, including origination of loans for sale to Fannie Mae and Freddie Mac, activities related to renewable energy generation and some new business initiatives.

"Considering the extremely challenging and unprecedented economic environment, we felt that suspending the dividend was in the best interests of our shareholders and the company," chief executive officer Michael L. Falcone said in the release.

"We will continue to restrict our business activities and conserve our resources until market conditions normalize.

"MuniMae will review the dividend payout on a quarterly basis and take the most prudent actions possible to ensure the strategic needs of the company are being met and that it is positioned to succeed when the environment changes."

The company said its first-quarter 2008 production was $432 million, compared to $738 million in the same period of 2007, primarily reflecting the impact of the credit and debt capital markets on its businesses.

"While we typically experience lower production in our first quarter, these results reflect the extremely difficult operating environment that the company is operating in," Falcone said in the release.

"We are working to clearly address each challenge to the business that the market is presenting to us and are pleased that certain businesses are showing strength and are growing.

"We have carefully allocated additional capital in these areas to facilitate growth and are pleased to see the return on our investment."

In addition, MuniMae said the audit of the 2007 financial statements of TE Bond Subsidiary, LLC and its subsidiaries, of which the company owns all the common shares, has been completed.

The company said its common shareholders equity in TE Bond Sub as of Dec. 31 was $356 million, an increase of $27 million over 2006.

Municipal Mortgage & Equity is a Baltimore-based provider of debt and equity financing to developers of multifamily and commercial properties.

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