SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
Commission File Number 0-23972
AMERICAN MORTGAGE ACCEPTANCE COMPANY
(Exact name of Registrant as specified in its charter)
MASSACHUSETTS 13-6972380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 MADISON AVENUE, NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 317-5700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Large Accelerated filer [ ] Accelerated filer [X] Non-accelerated
filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of April 28, 2006, there were 8,303,838 outstanding common shares of the
registrant's shares of beneficial interest, $0.10 par value.
TABLE OF CONTENTS
AMERICAN MORTGAGE ACCEPTANCE COMPANY
FORM 10-Q
PAGE
PART I
Item 1. Condensed Consolidated Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 19
Item 4. Controls and Procedures 20
PART II
Item 1. Legal Proceedings 21
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits 21
SIGNATURES 22
See accompanying notes to condensed consolidated financial statements.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
ASSETS
March 31, December 31,
2006 2005
----------- -----------
(Unaudited)
Cash and cash equivalents $ 678 $ 11,214
Investments
Debt securities at fair value 219,639 222,723
Mortgage loans receivable, net 53,297 51,981
Notes receivable, net 13,725 13,725
Revenue bonds 6,581 6,626
ARCap 20,152 20,678
Real estate owned - held and used, net 68,033 68,793
Accounts receivable 2,644 3,079
Other assets 3,595 1,904
--------- ---------
Total assets $ 388,344 $ 400,723
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Repurchase facilities payable $ 205,650 $ 209,101
Warehouse facility payable -- 4,070
Mortgages payable on real estate owned 40,355 40,487
Preferred shares of subsidiary (subject to mandatory repurchase) 25,000 25,000
Accounts payable and accrued expenses 1,489 1,599
Due to Advisor and affiliates 1,044 2,961
Distributions payable 3,322 3,322
--------- ---------
Total liabilities 276,860 286,540
--------- ---------
Commitments and contingencies
Shareholders' equity:
Shares of beneficial interest; $.10 par value; 25,000 shares authorized;
8,719 issued and 8,304 outstanding in 2006 and 2005 871 871
Treasury shares of beneficial interest at par; 415 shares in 2006 and 2005 (42) (42)
Additional paid-in capital 126,396 126,357
Share-based compensation -- (20)
Accumulated deficit (18,919) (17,766)
Accumulated other comprehensive income 3,178 4,783
--------- ---------
Total shareholders' equity 111,484 114,183
--------- ---------
Total liabilities and shareholders' equity $ 388,344 $ 400,723
========= =========
See accompanying notes to condensed consolidated financial statements.
3
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
-------------------
2006 2005
-------- --------
Revenues:
Interest income:
Debt securities $ 3,219 $ 3,032
Mortgage loans 1,989 615
Notes receivable 233 479
Revenue bonds 142 147
Temporary investments 83 17
Rental income of real estate owned - held and used 2,393 2,184
Other revenues 5 229
------- -------
Total revenues 8,064 6,703
------- -------
Expenses:
Interest 2,216 1,182
Interest - distributions to preferred shareholders of subsidiary (subject to
mandatory repurchase) 517 68
Mortgage interest for real estate owned - held and used 597 605
Property operations of real estate owned - held and used 1,465 920
General and administrative 487 437
Fees to Advisor 827 694
Depreciation 450 366
Amortization and other 15 133
------- -------
Total expenses 6,574 4,405
------- -------
Other income:
Equity in earnings of ARCap 679 600
Net loss on repayment of debt securities -- (71)
------- -------
Total other income 679 529
------- -------
Net income $ 2,169 $ 2,827
======= =======
Net income per share (basic and diluted) $ 0.26 $ 0.34
======= =======
Dividends per share $ 0.40 $ 0.40
======= =======
Weighted average shares outstanding:
Basic 8,304 8,337
======= =======
Diluted 8,307 8,344
======= =======
See accompanying notes to condensed consolidated financial statements.
4
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
---------------------
2006 2005
-------- --------
Cash flows from operating activities:
Net income $ 2,169 $ 2,827
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation expense 450 366
Equity in earnings of ARCap (679) (600)
Net loss on sale or repayment of assets -- 71
Amortization and accretion 8 79
Other non-cash income (85) --
Distributions received from equity investees 1,037 600
Changes in operating assets and liabilities:
Accounts receivable 435 (264)
Other assets 307 (203)
Due to Advisor and affiliates (1,917) 882
Accounts payable and accrued expenses (71) (26)
-------- --------
Net cash provided by operating activities 1,654 3,732
-------- --------
Cash flows from investing activities:
Investment in debt securities -- (36,574)
Principal repayments of debt securities 1,458 5,839
Funding and purchase of mortgage loans (1,263) --
Purchase of mortgage loans on real estate owned -- (17,150)
Proceeds from sale of real estate owned -- 7,474
Principal repayment on real estate owned -- 480
Funding of notes receivable -- (294)
Repayment of notes receivable -- 6,829
Principal repayment of revenue bonds 38 51
Additions to real estate owned -- (103)
-------- --------
Net cash provided by (used in) investing activities 233 (33,448)
-------- --------
continued
5
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
---------------------
2006 2005
-------- --------
Cash flows from financing activities:
Proceeds from repurchase facilities 3,830 40,402
Repayments of repurchase facilities (7,281) (19,710)
Proceeds from warehouse facility -- 243
Repayments of warehouse facility (4,070) --
Proceeds from line of credit - related party -- 14,761
Repayments of line of credit - related party -- (19,361)
Deferred financing costs (1,580) (802)
Distributions paid to shareholders (3,322) (3,334)
Treasury stock purchases -- (29)
Issuance of preferred shares of subsidiary -- 25,000
-------- --------
Net cash (used in) provided by financing activities (12,423) 37,170
-------- --------
Net (decrease) increase in cash and cash equivalents (10,536) 7,454
Cash and cash equivalents at the beginning of the year 11,214 2,674
-------- --------
Cash and cash equivalents at the end of the period $ 678 $ 10,128
======== ========
See accompanying notes to condensed consolidated financial statements.
6
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of American
Mortgage Acceptance Company and its wholly owned subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation. Unless
otherwise indicated, we herein refer to American Mortgage Acceptance Company and
its subsidiaries as "AMAC", "we", "us", "our", and "our Company". We are
externally managed by CharterMac AMI Associates, Inc., (the "Advisor"), a
subsidiary of CharterMac, a publicly traded company. We operate in one business
segment, which focuses on investing in mortgage loans secured by multifamily and
commercial property throughout the United States.
In March 2006, we formed AMAC CDO Funding I ("AMAC CDO"), a wholly owned
subsidiary, for the purposes of managing our first planned Collateralized Debt
Obligation ("CDO") securitization (see Note 5).
The condensed consolidated financial statements have been prepared without
audit. In the opinion of management, the financial statements contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly our financial position as of March 31, 2006, and the results of
our operations and our cash flows. However, the operating results for interim
periods may not be indicative of the results for the full year.
Certain information and footnote disclosures normally included in annual
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States of America ("GAAP") have been
condensed or omitted. It is suggested that these financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in our Form 10-K for the year ended December 31, 2005.
Our annual report on Form 10-K for the year ended December 31, 2005, contains a
summary of our significant accounting policies. There have been no material
changes to these items since December 31, 2005, except as noted below. As
previously disclosed, we converted a portion of our preferred investment in
ARCap Investors, LLC to common units. While we continue to account for this
investment under the equity method, a portion of the equity income recorded is
based on the preferred dividend, while the balance is based on our proportionate
share of common units outstanding.
The preparation of the consolidated financial statements in conformity with GAAP
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities as of the date of the financial statements as well as the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Certain prior year amounts, in particular, the reclassification of results of
operations of our real estate owned - held and used portfolio have been
reclassified to conform to the current year presentation.
NEW ACCOUNTING PRONOUNCEMENTS
During the first quarter of 2006, we were required to adopt the FASB STATEMENT
OF FINANCIAL ACCOUNTING STANDARDS NO. 123(R), SHARE-BASED PAYMENT, which
replaces SFAS No. 123. The impact of adopting this Standard was not material to
us, as we had been accounting for share-based payments following the fair value
provisions of SFAS No. 123.
7
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
NOTE 2 - INVESTMENTS IN DEBT SECURITIES - AVAILABLE FOR SALE
Information regarding our investments in debt securities is as follows:
(In thousands)
March 31, December 31,
2006 2005
--------- -----------
Amortized cost $ 217,385 $ 218,891
Unrealized gains 6,601 5,707
Unrealized losses (4,347) (1,875)
--------- ---------
Net unrealized gain 2,254 3,832
--------- ---------
Fair value $ 219,639 $ 222,723
========= =========
The fair value and gross unrealized losses of our debt securities aggregated by
length of time that these individual debt securities have been in a continuous
unrealized loss position, at March 31, 2006, and December 31, 2005, is
summarized in the table below:
(Dollars in thousands)
March 31, 2006 December 31, 2005
--------------------------------- ---------------------------------
Less than 12 Months Less than 12 Months
12 Months or More Total 12 Months or More Total
---------- ---------- --------- ---------- ---------- ---------
Number of securities 13 19 32 8 16 24
Fair value $ 63,801 $ 62,516 $126,317 $ 25,905 $ 56,281 $ 82,186
Gross unrealized
loss $ 832 $ 3,515 $ 4,347 $ 197 $ 1,678 $ 1,875
These unrealized losses are as a result of increases in interest rates
subsequent to the acquisition of the securities. All of the debt securities are
performing according to their terms. Furthermore, we have the intent and ability
to hold these securities to maturity, or at least until interest rates change
such that the fair value is no longer less than book value. Accordingly, we have
concluded that these declines in value are temporary.
At March 31, 2006, all of our debt securities were partially or wholly pledged
as collateral under our repurchase facilities. At March 31, 2006, we had no
availability to borrow against partially or unpledged debt securities.
8
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
NOTE 3 - REAL ESTATE OWNED
Real estate owned at March 31, 2006, and December 31, 2005, consisted of the
following:
(Dollars in thousands)
Carrying Carrying
Value Value
as of as of
Number of March 31, December 31,
Units Location 2006 2005
--------- --------------- --------- -----------
Real Estate Owned - Held and Used
Concord Portfolio 852 Houston, TX $ 53,267 $ 53,407
Less: accumulated depreciation (3,399) (3,062)
--------- ---------
Subtotal 49,868 50,345
--------- ---------
Reserve at Autumn Creek 212 Friendswood, TX 19,293 19,462
--------
Less: accumulated depreciation (1,128) (1,014)
--------- ---------
Subtotal 18,165 18,448
--------- ---------
Total Real Estate Owned - Held and Used, net 1,064 $ 68,033 $ 68,793
======== ========= =========
Mortgages Payable on Real Estate Owned
Concord Portfolio $ 40,355 $ 40,487
======== = =========
NOTE 4 - WAREHOUSE FACILITY
During February 2006, we repaid the remaining outstanding balance of
approximately $4.1 million on this facility. We can no longer borrow off of this
facility, as it has matured.
NOTE 5 - CDO RELATED REPURCHASE FACILITY
In addition to our existing repurchase facilities, we executed a new repurchase
agreement during March 2006 with Bank of America ("BOA"). The purpose of this
facility is to fund up to $250.0 million of investments that are to be placed
into our first CDO Securitization. Advance rates on the borrowings from this
facility, ranging from 50% to 95% of collateral value, will be determined on a
draw-by-draw basis in accordance with the repurchase agreement. Interest on the
borrowings, which range from LIBOR + 50 bps to LIBOR + 225 bps, are also
determined on a draw-by-draw basis. The repurchase facility expires upon
inception of the CDO securitization, or six months after the inception of the
repurchase facility, whichever comes first. There were no borrowings under the
new facility as of March 31, 2006. In connection with the CDO securitization, we
have prepaid approximately $1.5 million of a 1% fee due in full when the CDO is
securitized. These fees, which are non-refundable, have been deferred and will
be amortized over the life of the CDO securitization.
9
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
NOTE 6 - SHAREHOLDERS' EQUITY
Comprehensive Income
Comprehensive income for the three months ended March 31, 2006 and 2005, was as
follows:
(In thousands)
Three months ended
March 31,
---------------------
2006 2005
-------- --------
Net income $ 2,169 $ 2,827
Net unrealized gain on interest rate derivatives 147 556
Net unrealized holding loss on investments (1,586) (1,802)
Comprehensive income of equity investments (166) --
------- -------
Comprehensive income $ 564 $ 1,581
======= =======
NOTE 7 - SHARE BASED COMPENSATION
In accordance with our Amended and Restated Incentive Share Option Plan (the
"Plan"), our board of trustees can award share options to trustees, officers and
employees of AMAC and our Advisor and its affiliates. A maximum of 830,384
options can be granted, with annual limits based upon formulas specified in the
Plan. Option terms and vesting requirements are determined at the time of grant,
provided that the term is no longer than ten years.
In accordance with SFAS No. 123(R), we accrue compensation cost based on the
estimated fair value of the options issued and amortize those costs over the
vesting period. Because the grant recipients are not our employees and vesting
of the options is contingent upon the recipient continuing to provide services
to us, we estimate the fair value of the options at each period-end up to the
vesting date, and adjust recorded amounts accordingly.
The assumptions used for valuing these options and the results of the valuations
at March 31, 2006, were as follows:
Weighted average assumptions:
Dividend yield 9.98%
Estimated volatility 25.00%
Risk free interest rate 4.73%
Expected life (years) 4.91
There were 643,332 shares available for grant as of March 31, 2006.
10
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
The following table summarizes share option activity in the Plan for the three
months ended March 31, 2006:
Weighted
Average
Exercise
Options Price
--------- --------
Outstanding at beginning of period 187,052 $ 15.78
Granted -- --
Forfeited -- --
Exercised -- --
-------- --------
Outstanding at end of period 187,052 $ 15.78
======== ========
Exercisable at end of period 146,385 $ 15.78
======== ========
Compensation cost recognized $ 59,000
========
NOTE 8 - EARNINGS PER SHARE
Diluted net income per share is calculated using the weighted average number of
shares outstanding during the period plus the additional dilutive effect of
common share equivalents. The dilutive effect of outstanding share options is
calculated using the treasury stock method.
(In thousands, except per share amounts)
Three Months Ended March 31, 2006: Income Shares Per Share
-------- -------- ---------
Basic EPS $2,169 8,304 $ 0.26
Effect of dilutive securities -- 3 --
------ ------ ------
Diluted EPS $2,169 8,307 $ 0.26
====== ====== ======
Three Months Ended March 31, 2005:
Basic EPS $2,827 8,337 $ 0.34
Effect of dilutive securities -- 7 --
------ ------ ------
Diluted EPS $2,827 8,344 $ 0.34
====== ====== ======
11
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
NOTE 9 - RELATED PARTY TRANSACTIONS
The costs paid or payable to our Advisor for the three months ended March 31
were as follows:
(In thousands)
2006 2005
---------- ----------
Shared services expenses $ 202 $ 246
Asset management fees (1) 431 328
Incentive management fee (2) 194 120
--------- ---------
$ 827 $ 694
========= =========
(1) These fees were incurred pursuant to our prior management agreement, which,
as previously disclosed, has been amended effective April 1, 2006.
(2) Accrual based on proportion of actual first quarter earnings as compared to
our estimates of 2006 full-year results.
During April 2006, we purchased a loan from CharterMac for the CDO
securitization (see Note 11).
During April 2006, we amended our loan agreement with CharterMac to increase our
borrowing capacity and extend the maturity date of our related party facility
(see Note 11).
NOTE 10 - COMMITMENTS AND CONTINGENCIES
a) Legal
On October 27, 2003, prior to taking possession of the real estate collateral
supporting a loan investment, we were named in a lawsuit, Concord Gulfgate, Ltd.
vs. Robert Parker, Sunrise Housing Ltd., and American Mortgage Acceptance
Company, Cause No. 2003-59290 in the 133rd Judicial District Court of Harris
County, Texas. The suit alleges that the loan transaction was not properly
authorized by the borrower and was not for a legitimate borrower purpose. The
suit claims, among other causes of action against the respective defendants,
wrongful foreclosure of the real estate collateral, tortious interference with
contract and civil conspiracy. The suit seeks, among other relief, actual,
consequential, and exemplary damages, and a declaration that the loan documents
are unenforceable and constitute a cloud on title. The basic claim of this suit
is for the amount of $1.5 million. The discovery phase of this suit has been
completed. A motion for summary judgment was filed by us, but was denied on July
25, 2005. It is not known when the case will be called to trial.
We filed a countersuit on November 25, 2003, against Concord Gulfgate, Ltd., as
guarantor, seeking a deficiency on the loan and recovery of unpaid taxes and
certain property receipts. We are currently unable to determine the possible
outcome of the litigation.
b) Guarantees
Prior to 2000, we entered into a loan program with Fannie Mae, under which, we
agreed to guarantee a first-loss position on certain loans, which could have
potentially resulted in an aggregate exposure of $7.5 million. In June and
October of 2000, we originated two loans totaling $3.3 million under the
program. In September 2003, we transferred and assigned all of our obligations
with respect to these two loans to CharterMac Mortgage Capital ("CMC"), a
subsidiary of CharterMac, both of which are affiliates of the Advisor. Pursuant
to the agreement with CMC, CharterMac guaranteed CMC's obligations, and we
agreed to indemnify both CMC and CharterMac for any losses incurred in exchange
for retaining all fees which we were otherwise entitled to receive from Fannie
12
AMERICAN MORTGAGE ACCEPTANCE COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
Mae under the program. The maximum exposure at March 31, 2006, was $3.2 million,
although we expect that we will not be called upon to fund these guarantees.
In the first quarter of 2003, we discontinued our loan program with Fannie Mae
and will issue no further guarantees pursuant to such program.
For these guarantees, we monitor the status of the underlying properties and
evaluate our exposure under the guarantees. To date, we have concluded that no
accrual for probable losses is required under SFAS No. 5, ACCOUNTING FOR
CONTINGENCIES.
Future Funding Commitments
--------------------------
We are committed to additionally fund the following bridge and mezzanine loans:
(In thousands)
MAXIMUM AMOUNT OF COMMITMENT
-------------------------------------
NO. OF APT. LESS THAN
ISSUE DATE PROJECT LOCATION UNITS TOTAL 1 YEAR 1-3 YEARS
-------------------------------------------------------------------------------------------------------------------
Jun-04 Woods of Mandarin Jacksonville, FL 401 $ 428 $ 428 $ --
Apr-05 Atlantic Hearthstone Hillsborough, NJ 198 2,641 1,757 884
May-05 Pasadena Pasadena, FL 198 556 556 --
Jul-05 222 Pearson Chicago, IL 219 516 516 --
Jul-05 Bayfront Villas Gulfport, FL 120 258 258 --
Sep-05 Marbella Clearwater, FL -- 399 399 --
----------------------------------------------------
TOTAL FUTURE FUNDING COMMITMENTS 1,136 $4,798 $3,914 $ 884
====================================================
NOTE 11 - SUBSEQUENT EVENTS
During April 2006, AMAC CDO purchased a first mortgage loan from CharterMac, the
parent of our Advisor, at approximately its $26.0 million par value. This note,
along with an existing $5.0 million subordinated participation already owned by
us, were assigned to AMAC CDO and pledged as collateral under the repurchase
facility, in exchange for $29.2 million in funds.
In addition to the first mortgage loan purchased from CharterMac, we partially
or fully funded four first mortgage loans, totaling approximately $82.0 million,
for the CDO securitization. The loans bear interest at a weighted average
interest rate of 6.41%. We have assigned four loans to the CDO related
repurchase facility, receiving approximately $78.1 million in proceeds. Interest
is due on the facility, relating to these loans, at 30-day LIBOR plus a weighted
average interest rate spread of 1.00%. The loans funded included $16.9 million
pertaining to a property developed by a company controlled by the Chairman of
CharterMac.
During April 2006, we sold a debt security and a mortgage loan, both pertaining
to one property. We received $14.6 million in partial proceeds, of which $14.2
was used to repay funds borrowed from the securitization of the debt security on
our repurchase facilities. We expect to receive the final payment of $850,000
after certain conditions are met pursuant to the purchase agreement. There was
no gain or loss resulting from this sale.
During April 2006, we amended our loan agreement with CharterMac to increase our
borrowing capacity to $50.0 million under the related party facility (see Note
9). The maturity of the facility was also extended to June 2007.
Effective April 2006, we dissolved one subsidiary that was formed for the
purposes of managing a repurchase facility, which expired in March 2004.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward-Looking Statements
--------------------------
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.
Such forward-looking statements include statements regarding the intent, belief
or current expectations of us and our management (which includes our Advisor)
and involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. These factors, which are outlined in detail in
our annual report on Form 10-K for the year ended December 31, 2005, include the
following:
o Risks of investing in uninsured and non-investment grade mortgage assets
and subordinated Commercial Mortgage-Backed Securities ("CMBS");
o Competition in acquiring desirable investments;
o Interest rate fluctuations;
o Risks associated with hedging transactions, which can limit gains and
increase exposure to loss.
o Risks associated with investments in real estate generally and the
properties which secure many of our investments;
o General economic conditions, particularly as they affect the value of our
assets and the credit status of our borrowers;
o Dependence on our external Advisor for all services necessary for our
operations;
o Conflicts which may arise among us and other entities affiliated with our
Advisor which have similar investment policies to ours; and
o Risks associated with the repurchase agreements we utilize to finance our
investments and the availability of financing generally.
o Risks associated with our contemplated CDO transactions, which include, but
are not limited to:
o The inability to acquire eligible investments for a CDO issuance;
o The inability to find suitable replacement investments in
collateralized debt obligations with reinvestment periods; and
o The negative impact on our cash flow that may result from the use of
CDO financings with over-collateralization and interest coverage
requirements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this quarterly report.
Factors Affecting Comparability
-------------------------------
During March 2005, we issued $25.0 million of Floating Rate Preferred Securities
through a subsidiary. Due to the mandatory redemption feature of these
securities, the payments or accruals of dividends and other amounts to be paid
to the holders of these securities are reported as interest costs. As a result,
these interest costs are classified as Interest - Distributions to Preferred
Shareholders of Subsidiary (Subject to Mandatory Repurchase). During the first
quarter of 2006, we recorded a full period of these costs, as compared to costs
relating to a half of a month in the comparable 2005 period.
14
Results of Operations
---------------------
The following is a summary of our operations for the three months ended March
31, 2006 and 2005:
(In thousands)
Three Months Ended March 31,
----------------------------
2006 2005 Change
------ ------ ------
Total revenues $8,064 $6,703 20.3 %
Total expenses 6,574 4,405 49.2
Total other income 679 529 28.4
------ ------ -----
Net income $2,169 $2,827 (23.3)%
====== ====== =====
In the three-month period ended March 31, 2006, as compared to the same period
in 2005, revenues increased mainly due to the funding of several new mezzanine
loans during the second half of 2005. Expenses have also increased for these
periods due to the recognition of certain property level costs for Real Estate
Owned and financing costs (particularly due to a trust preferred offering and
higher interest rates). Other income has increased due to the conversion of
ARCap shares from preferred to common, earning higher equity income.
REVENUES
Three Months
Ended March 31, 2006
---------------------------------
% Change % of Total
from Prior Period Revenues
---------------------------------
Interest income:
Debt securities 6.2 % 39.9 %
Mortgage loans 223.4 24.7
Notes receivable (51.4) 2.9
Revenue bonds (3.4) 1.7
Temporary investments 388.2 1.0
Other revenues (97.8) 0.1
----- -----
Subtotal 25.5 70.3
Rental income 9.6 29.7
----- -----
Total revenues 20.3 % 100.0 %
===== =====
We had the following investments (exclusive of Real Estate Owned and ARCap):
(In thousands)
As of As of
March 31, 2006 March 31, 2005
---------------------------------- ---------------------------------
Weighted Weighted
Average Average
Carrying % of Interest Carrying % of Interest
Amount Total Rate Amount Total Rate
--------------------------------------------------------------------
Debt securities $219,639 74.9% 6.23% $223,429 83.3% 6.33%
Mortgage loans 53,297 18.2 14.98 21,395 8.0 11.68
Notes receivable 13,725 4.7 10.26 16,584 6.2 9.31
Revenue bonds 6,581 2.2 8.68 6,604 2.5 8.69
-------- ------ ----- -------- ------ -----
$293,242 100.0% 8.18% $268,012 100.0% 7.12%
======== ====== ===== ======== ====== =====
Interest income from debt securities increased, primarily due to the purchase of
seven new FNMA certificates during the second half of 2005, partially offset by
the repayment of two GNMA certificates. The decrease in the weighted average
interest rate on debt securities as of March 31, 2006, as compared to December
31, 2005, was primarily due to the rising interest rates on mortgage loans; as
15
mortgage interest rates rise, yields on debt securities tend to decrease.
Interest income from mortgage loans increased for the three months ended March
31, 2006, as compared to 2005, primarily due to the funding of six mezzanine
loans during the second and third quarters of 2005. The increase in the weighted
average interest rates on mortgage loans as of March 31, 2006, as compared to
December 31, 2005, was primarily due to the increase in market interest rates,
as many of our mezzanine loans have variable interest rates.
Interest income from notes receivable decreased for the three months ended March
31, 2006, as compared to 2005, primarily due to the payoff of four notes during
2005.
Rental income increased for the three months ended March 31, 2006, as compared
to 2005, due to the recognition of a full period of income from property
operations of Autumn Creek in 2006 (as compared to a partial period in 2005),
offset by the Plaza at San Jacinto sale in February 2005.
EXPENSES
Three Months
Ended March 31, 2006
--------------------------
% Change from % of Total
Prior Period Revenues
------------- ----------
Interest 87.5% 27.5%
Distributions to preferred shareholders 660.3 6.4
General and administrative 11.4 6.0
Fees to Advisor 19.2 10.3
Amortization and other (88.7) 0.2
----- ----
Subtotal 61.6 50.4
Property operations 59.2 18.2
Depreciation 23.0 5.6
Mortgage interest for real estate owned - held and used (1.3) 7.4
----- -----
Total expenses 49.2% 81.5%
===== =====
At March 31, 2006, excluding the non-recourse mortgage on real estate owned, we
had total debt of approximately $230.7 million with a weighted average interest
rate of 5.04% per year, including the effect of our swap agreement. At March 31,
2005, we had a comparable balance of approximately $207.4 million with a
weighted average interest rate of 3.43% per year. The increase in the weighted
average interest rate is due to steady increases in market interest rates during
2005 and 2006.
Interest expense increased for the three months ended March 31, 2006, as
compared to 2005, primarily due to the increased borrowings on the repurchase
facilities stemming from an increased investment base and the increase in
interest rates during 2005 and 2006.
Distributions to preferred shareholders increased for the three months ended
March 31, 2006, as compared to 2005 due to the issuance of trust preferred
securities in March 2005.
General and administrative expenses increased for the three months ended March
31, 2006, as compared to 2005, primarily due to increased accounting and
Sarbanes-Oxley compliance fees, excise taxes, insurance and stock option costs
(the last factor due to a rising stock price and the accelerated vesting of
certain options). These increases were offset by decreased legal and investor
services expenses.
Fees to Advisor increased for the three months ended March 31, 2006, as compared
to 2005, due to the accrual of incentive management fees relating to the
projected 2006 earnings. We accrue these costs proportionately with our
projected quarterly earnings. In addition, we incurred higher overhead costs and
asset management fees because of expansion of our business and an increased
asset base (approximately $381.4 million in first quarter of 2006, as compared
to approximately $359.2 million in comparable 2005 period). Effective in the
16
second quarter of 2006, the asset management fees due to our Advisor will be
based on our shareholder's equity balance, instead of our asset base.
Property operations represent all non-interest costs at the property level on
all of our Real Estate Owned - Held and Used properties. The increase for the
three months ended March 31, 2006, as compared to 2005, was mainly due to higher
property tax costs.
Depreciation expense increased for the three months ended March 31, 2006, as
compared to 2005, due to a higher base of depreciable real estate owned in 2006
as compared to the 2005 period. In February 2005, we sold the Plaza at San
Jacinto property and, in 2006, foreclosed on the larger Autumn Creek property.
OTHER INCOME
Other income increased for the three months ended March 31, 2006, as compared to
2005, due to the conversion of 315,000 of our 800,000 ARCap shares from
preferred to common at the end of 2005. Upon conversion, we are earning a higher
level of equity income from the common share portion of the investment. In
addition, 2005 includes the recognition of a loss resulting from the sale of a
GNMA certificate, with no comparable loss in 2006.
Funds from Operations
---------------------
Funds from operations ("FFO"), represents net income or loss (computed in
accordance with GAAP), excluding gains or losses from sales of property,
excluding depreciation and amortization related to real property and including
funds from operations for unconsolidated joint ventures calculated on the same
basis. FFO is calculated in accordance with the National Association of Real
Estate Investment Trusts ("NAREIT") definition. FFO does not represent cash
generated from operating activities in accordance with GAAP and is not
necessarily indicative of cash available to fund cash needs. FFO should not be
considered as an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flows as a measure of
liquidity. Our management considers FFO a supplemental measure of operating
performance, and, along with cash flows from operating activities, financing
activities, and investing activities, it provides investors with an indication
of our ability to incur and service debt, make capital expenditures, and fund
other cash needs.
The following table reconciles net income to FFO for the three months ended
March 31, 2006 and 2005:
(In thousands)
2006 2005
-------- --------
Net income $ 2,169 $ 2,827
Add back: depreciation of real property $ 450 366
-------- --------
FFO $ 2,619 $ 3,193
======== ========
Cash flows from:
Operating activities $ 1,654 $ 3,732
======== ========
Investing activities $ 233 $(33,448)
======== ========
Financing activities $(12,423) $ 37,170
======== ========
Weighted average shares outstanding:
Basic 8,304 8,337
======== ========
Diluted 8,307 8,344
======== ========
Since not all companies calculate FFO in a similar fashion, our calculation
presented above may not be comparable to similarly titled measures reported by
other companies.
17
Liquidity and Capital Resources
-------------------------------
SOURCES OF FUNDS
We expect that cash generated from our investments, as well as our borrowing
capacity, will meet our needs for short-term liquidity and will be sufficient to
pay all expenses and distributions to our shareholders in amounts sufficient to
retain our Real Estate Investment Trust ("REIT") status in the foreseeable
future. In order to qualify as a REIT under the Internal Revenue Code (the
"Code"), as amended, we must, among other things, distribute at least 90% of our
taxable income. We believe that we are in compliance with the REIT-related
provisions of the Code.
We finance our investing activity primarily through borrowing from various
facilities at short-term rates. At March 31, 2006, we had approximately $20.0
million available to borrow, contractually, under our debt facilities without
exceeding limits imposed by debt covenants and our declaration of trust. We also
had $250.0 million available to borrow, contractually, under our new repurchase
facility at March 31, 2006. Subsequently, we borrowed $29.2 million off of this
facility to purchase a note from CharterMac (see Note 11 to the condensed
consolidated financial statements). In April 2006, an amendment was approved to
extend our facility with CharterMac to June 2007 and increase the amount
available to borrow from $20.0 million to $50.0 million.
From time to time, we may also issue common shares or other equity to fund
investing activity. During 2005, our subsidiary issued $25.0 million of
variable-rate Preferred Securities. The proceeds received were used to purchase
FNMA certificates.
We have capacity to raise approximately $170.0 million of additional funds by
issuing either common or preferred shares pursuant to a shelf registration
statement filed with the SEC. If market conditions warrant, we may seek to raise
additional funds for investment through further offerings, although the timing
and amount of such offerings cannot be determined at this time.
We are expecting to utilize Collateralized Debt Obligations ("CDOs") as a
financing tool to lower our cost of capital and thereby enhance our investment
capabilities and opportunities. Tapping these securitization markets should
enable the Company to compete in debt markets in which we have not competed
effectively in the past and to originate a wide variety of debt products,
including floating or fixed rate assets, first mortgages, subordinate
participations in first mortgages, bridge loans, mezzanine loans, etc. We intend
for the assets to be aggregated on our balance sheet and later securitized. It
is anticipated that our origination activity would begin to increase in the
second quarter of 2006 with the goal of completing our first CDO securitization
by the third quarter of 2006, although there are no assurances that we will
proceed with such a program.
SUMMARY OF CASH FLOWS
During the three months ended March 31, 2006, as compared to the three months
ended March 31, 2005, the net change in cash and cash equivalents decreased
approximately $18.0 million. Despite increased cash flows from receivables
collected and equity income received, operating cash flows decreased by
approximately $2.1 million primarily due to lower earnings and the payment of
certain payables and Advisory fees incurred in 2005.
A decrease in net cash used in investing activities (approximately $33.7
million) was due to the decline in investments made during the first quarter of
2006, as compared to 2005. This was due to shifting our focus to originating
loans for our first CDO securitization, most of which are due to close during
the second quarter of 2006. There was also a decrease in net cash provided by
financing activities (approximately $49.6 million) that can be attributed to the
lower level of investing activity during the 2006 period, offset by partial
repayments made to the repurchase facilities and the full repayment of the
warehouse facility.
LIQUIDITY REQUIREMENTS AFTER MARCH 31, 2006
During April 2006, we have closed approximately $108.0 million of first mortgage
loans, including a $26.0 million loan purchased from CharterMac, the parent of
our Advisor (see Note 11 to our condensed consolidated financial statements). We
plan to securitize these loans in our first CDO. In addition to these loans, we
anticipate approximately another $226.0 million in acquisition volume for the
CDO securitization to close during the second quarter of 2006. Financing for the
anticipated acquisitions is expected to be made through our new repurchase
facility with BOA (see Note 5 to our condensed consolidated financial
statements).
18
During May 2006, distributions of approximately $3.3 million ($0.40 per share),
which were declared in March 2006, will be paid to common shareholders.
We are not aware of any trends or events, commitments or uncertainties, which
have not otherwise been disclosed that will or are likely to impact liquidity in
a material way.
Dividends
---------
The following table outlines our total dividends and return of capital amounts,
determined in accordance with GAAP, for the three months ended March 31:
(In thousands)
2006 2005
------ ------
Total dividends $3,322 $3,334
Return of capital:
Amount $1,152 $ 508
Per share $0.14 $0.06
Percent of total dividends 34.69% 15.22%
Commitments, Contingencies and Off-Balance Sheet Arrangements
-------------------------------------------------------------
See Note 10 to our condensed consolidated financial statements for a summary of
our guarantees and commitments and contingencies.
We have no unconsolidated subsidiaries, special purpose off-balance sheet
financing entities, or other off-balance sheet arrangements.
CONTRACTUAL OBLIGATIONS
In conducting business, we enter into various contractual obligations. Details
of these obligations, including expected settlement periods, are contained
below.
Payments Due by Period
(In thousands)
-----------------------------------------------------------
Less than More than
Total 1 Year 1 - 3 Years 3 - 5 Years 5 Years
--------- --------- ----------- ----------- ---------
Debt:
Repurchase facilities $205,650 $205,650 $ -- $ -- $ --
Mortgage loan on real estate owned (1) 40,355 504 1,200 1,350 37,301
Preferred shares of subsidiary
(subject to mandatory repurchase) 25,000 -- -- -- 25,000
Funding Commitments:
Standby and forward loan commitments 4,798 3,914 884 -- --
-------- -------- -------- -------- --------
Total $275,803 $210,068 $ 2,084 $ 1,350 $ 62,301
======== ======== ======== ======== ========
(1) Represents a first mortgage on properties we report as Real Estate Owned -
Held and Used (Concord Portfolio) as a sale of the properties did not meet
the criteria for sale recognition in accordance with GAAP. The first
mortgage loan is non-recourse with respect to AMAC, the debt service is paid
from the cash flows of the properties, and we will not be required to
satisfy the obligation.
Inflation
---------
Inflation did not have a material effect on our results for the periods
presented.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in interest rates and
equity prices. The primary market risk to which the Company is exposed is
interest rate risk, which is highly sensitive to many factors, including
governmental monetary and tax policies, domestic and international economic and
political considerations and other factors beyond the control of our Company.
19
INTEREST RATE RISK
Interest rate fluctuations can adversely affect our income in many ways and
present a variety of risks, including the risk of mismatch between asset yields
and borrowing rates.
Our operating results depend in large part on differences between the income
from our assets (net of credit losses) and our borrowing costs. Although we are
increasing our originations of variable rate loans, most of our assets generate
fixed returns and have terms in excess of five years. We fund the origination
and acquisition of a significant portion of our assets with borrowings which
have variable interest rates that reset relatively rapidly, such as weekly,
monthly, or quarterly. In most cases, the income from assets will respond more
slowly to interest rate fluctuations than the cost of borrowings, creating a
mismatch between asset yields and borrowing rates. Consequently, changes in
interest rates, particularly short-term interest rates, may influence our net
income. Our borrowings under repurchase and our trust preferred securities bear
interest at rates that fluctuate with LIBOR.
Various financial vehicles exist which would allow our management to mitigate
the impact of interest rate fluctuations on our cash flows and earnings. We
enter into certain hedging transactions to protect our positions from interest
rate fluctuations and other changes in market conditions. These transactions
include interest rate swaps and fair value hedges. Interest rates swaps are
entered into in order to hedge against increases in floating rates on our
repurchase facilities. Fair value hedges are entered into for some of our
investments to hedge our risk that interest rates may affect the fair value of
these investments, prior to securitization.
Based on the $200.7 million unhedged portion of the $230.7 million of borrowings
outstanding at March 31, 2006, and a fair value hedge on a $5.0 million note, a
1% change in LIBOR would impact our annual net income and cash flows by
approximately $2.0 million. However, as the interest income from some of our
loans is also based on LIBOR, a 1% increase in LIBOR would increase our annual
net income and cash flows from such loans by approximately $387,000. The net
effect of a 1% increase in LIBOR would therefore result in a reduction of our
annual net income by approximately $1.6 million. In addition, an increase in
LIBOR could also impede the collections of interest on our variable-rate loans,
as there might not be sufficient cash flow at the properties to pay the
increased debt service. Because the value of our debt securities fluctuates with
changes in interest rates, rate fluctuations will also affect the market value
of our net assets.
ITEM 4. CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Our Chief Executive
Officer and Chief Financial Officer have evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rule
13a-15(e) or Rule 15a-15(e) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) as of the end of the period covered by
this quarterly report. Based on such evaluation, such officers have
concluded that our disclosure controls and procedures as of the end of
the period covered by this quarterly report were effective to ensure
that information required to be disclosed by the Company in the
reports that the Company files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods
specified in the SEC rules and forms, and to ensure that such
information is accumulated and communicated to the Company's
management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.
(b) INTERNAL CONTROL OVER FINANCIAL REPORTING. In January 2006, our
Advisor initiated an internal audit function by hiring an external
specialty firm to execute the function. Other than the foregoing,
there have not been any significant changes in our internal control
over financial reporting during the fiscal quarter to which this
report relates that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 27, 2003, prior to taking possession of the real estate
collateral supporting a loan investment, we were named in a lawsuit,
Concord Gulfgate, Ltd. vs. Robert Parker, Sunrise Housing Ltd., and
American Mortgage Acceptance Company, Cause No. 2003-59290 in the
133rd Judicial District Court of Harris County, Texas. The suit
alleges that the loan transaction was not properly authorized by the
borrower and was not for a legitimate borrower purpose. The suit
claims, among other causes of action against the respective
defendants, wrongful foreclosure of the real estate collateral,
tortious interference with contract and civil conspiracy. The suit
seeks, among other relief, actual, consequential, and exemplary
damages, and a declaration that the loan documents are unenforceable
and constitute a cloud on title. The basic claim of this suit is for
the amount of $1.5 million. The discovery phase of this suit has been
completed. A motion for summary judgment was filed by us, but was
denied on July 25, 2005. It is not known when the case will be called
to trial.
We filed a countersuit on November 25, 2003, against Concord
Gulfgate, Ltd., as guarantor, seeking a deficiency on the loan and
recovery of unpaid taxes and certain property receipts. We are
currently unable to determine the possible outcome of the litigation.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors as disclosed
in our filing on form 10-K for the year ended December 31, 2005.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS - None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS
31.1 Chief Executive Officer certification pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.*
31.2 Chief Financial Officer certification pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.*
32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.*
* Filed herewith.
21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN MORTGAGE ACCEPTANCE COMPANY
(Registrant)
Date: May 10, 2006 By: /s/ Jeff T. Blau
----------------
Jeff T. Blau
Chairman of the Board of Trustees
and Chief Executive Officer
Date: May 10, 2006 By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Managing Trustee and Chief Financial Officer
Exhibit 31.1
CERTIFICATION
I, Jeff T. Blau, hereby certify that:
1. I have reviewed this quarterly report on Form 10-Q for the period
ending March 31, 2006, of American Mortgage Acceptance Company;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure the material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrant's disclosure controls
and procedures presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 10, 2006 By: /s/ Jeff T. Blau
------------ ----------------
Jeff T. Blau
Chief Executive Officer
Exhibit 31.2
CERTIFICATION
I, Alan P. Hirmes, hereby certify that:
1. I have reviewed this quarterly report on Form 10-Q for the period
ending March 31, 2006, of American Mortgage Acceptance Company;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure the material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrant's disclosure controls
and procedures presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 10, 2006 By: /s/ Alan P. Hirmes
------------ ------------------
Alan P. Hirmes
Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18.U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of American Mortgage Acceptance Company
(the "Company") on Form 10-Q for the period ending March 31, 2006 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), Jeff
T. Blau, as Chief Executive Officer of the Company, and Alan P. Hirmes, as Chief
Financial Officer of the Company each hereby certifies, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
By: /s/ Jeff T. Blau By: /s/ Alan P. Hirmes
---------------- ------------------
Jeff T. Blau Alan P. Hirmes
Chief Executive Officer Chief Financial Officer
May 10, 2006 May 10, 2006
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.