Western Asset Mortgage Capital Corporation Provides A Second Quarter Dividend And Book Value Update

Rhea-AI Summary

Western Asset Mortgage Capital Corporation (NYSE: WMC) announced it will not pay a common stock dividend for the second quarter, aiming to preserve liquidity amid the COVID-19 pandemic. The decision is driven by the necessity to retain earnings, thus increasing shareholder equity. The company's estimated book value per share as of May 31, 2020, is approximately $3.26, subject to market fluctuations. The Board will reassess dividend payments based on market conditions and the company's financial health, ensuring compliance with REIT distribution requirements for the upcoming fiscal year.

Positive

• Decision to retain earnings may strengthen liquidity.
• Potential for increased shareholder equity by not issuing dividends.

Negative

• No dividend payment may negatively impact investor sentiment.
• Uncertainty related to future dividend payments based on market conditions.

PASADENA, Calif., June 23, 2020 /PRNewswire/ -- Western Asset Mortgage Capital Corporation (the "Company") (NYSE: WMC) announced today that the Company will not pay a common stock dividend in the second quarter.

As the Company continues to manage the impact of the COVID-19 pandemic on its investment portfolio and operations, the Company and its Board of Directors concluded it is in the best interests of its shareholders to continue to preserve liquidity and increase shareholders equity by retaining earnings in the second quarter. The Company will continue to monitor market conditions, including the financing market for its assets, and the potential impact that changing market conditions may have on its business. The Company's Board of Directors will evaluate the payment of dividends in light of evolving market conditions and the Company's liquidity position, taxable income, and leverage. Additionally, the Company is monitoring its taxable income to ensure that the Company meets the minimum distribution requirements to maintain its status as a REIT for the annual period ending December 31, 2020.

The Company estimates that its book value per share, as of May 31, 2020, was approximately $3.26. The May 31, 2020 estimated book value is unaudited, has not been verified or reviewed by any third party and is subject to normal quarterly reconciliation and other procedures. Book value will fluctuate with market conditions, the results of the Company's operations and other factors. The Company's current book value may be materially different from the May 31, 2020 estimated book value.   

ABOUT WESTERN ASSET MORTGAGE CAPITAL CORPORATION

Western Asset Mortgage Capital Corporation is a real estate investment trust that invests in, acquires and manages a diverse portfolio of assets consisting of Residential Whole Loans, Commercial Whole Loans, Non-Agency CMBS, GSE Risk Transfer Securities and to a lesser extent Agency CMBS, Agency RMBS, Non-Agency RMBS and ABS. The Company's investment strategy may change, subject to the Company's stated investment guidelines, and is based on its manager Western Asset Management Company, LLC's perspective of which mix of portfolio assets it believes provide the Company with the best risk-reward opportunities at any given time. The Company is externally managed and advised by Western Asset Management Company, LLC, an investment advisor registered with the SEC and a wholly-owned subsidiary of Legg Mason, Inc.

On February 18, 2020, Franklin Resources, Inc. ("Franklin") and Legg Mason announced that they had entered into an agreement under which Franklin would acquire Legg Mason and its affiliates, including Western Asset Management Company, LLC.   The transaction is expected to close in the third quarter of 2020 and is subject to customary closing conditions.  Upon completion of the transaction Western Asset Management Company, LLC would become a wholly owned subsidiary of Franklin.

Please visit the Company's website at www.westernassetmcc.com.

FORWARD-LOOKING STATEMENTS

Certain items in this press release may constitute forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to the proposed offering and the anticipated use of the net proceeds from the offering. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company can give no assurance that its expectations will be attained. Factors that may cause actual results to vary from our forward-looking statements include, but are not limited to, changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability and terms of financing; general economic conditions; market conditions; conditions in the market for mortgage related investments; legislative and regulatory changes that could adversely affect the business of the Company; and other factors, including those set forth in the Risk Factors section of the Company's annual report on Form 10-K for the period ended December 31, 2019 and quarterly report on Form 10-Q for the fiscal quarters ended March 31, 2020, respectively, filed with the SEC. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

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SOURCE Western Asset Mortgage Capital Corporation

FAQ

What is the reason for WMC not paying a second quarter dividend?

WMC decided to not pay a dividend to preserve liquidity and increase shareholder equity amidst the COVID-19 pandemic.

What is the estimated book value of WMC as of May 31, 2020?

The estimated book value per share for WMC is approximately $3.26 as of May 31, 2020.

When will WMC reassess its dividend payments?

WMC's Board of Directors will evaluate dividend payments based on evolving market conditions and the company's liquidity position.

How does WMC plan to comply with REIT distribution requirements?

WMC is monitoring its taxable income to ensure it meets minimum distribution requirements for REIT status by the end of 2020.