Luminent Mortgage Capital Inc on Monday said it suspended its 32 cents per share quarterly dividend and is exploring options to boost liquidity, becoming the latest casualty of the U.S. housing downturn.
The San Francisco-based real estate investment trust said it faces a significant increase in margin calls on its highest quality assets, and tougher terms from its own lenders. It also said the secondary market for mortgage loans and mortgage-backed securities has seized up, and since Friday has deteriorated significantly and in an unprecedented fashion.
Luminent suspended the dividend just one week after saying the dividend is secure and will not be canceled, and it had ample liquidity to manage its business. It said it had planned to pay the dividend on Aug. 8.
The announcement shows how lenders' and investors' risk aversion has spread beyond riskier subprime mortgages to entities that make or invest in home loans thought to be safer. One such lender, American Home Mortgage Investment Corp, filed for Chapter 11 bankruptcy protection on Monday.
According to its Web site, Luminent is an asset manager that buys prime whole loans, U.S. agency and other highly rated, single-family, adjustable-rate, hybrid adjustable-rate and fixed-rate mortgage-backed securities. It said it does not buy subprime loans or make home loans.
Luminent said it has delayed filing its quarterly report with the SEC, and is considering a full range of strategic alternatives to enhance its liquidity and preserve shareholder value during this period of market volatility.
The REIT said it ended June with $9.5 billion of assets and $9.06 billion of liabilities on its balance sheet, slightly less than half what American Home had reported as of March 31.
Second-quarter profit fell 24 percent to $13.4 million, or 30 cents per share, from $17.6 million, or 45 cents, Luminent said. The company said it was incorporated in 2003, and also operates in Philadelphia.
Luminent shares fell $1.98, or 31.3 percent, to $4.35 in morning trading on the New York Stock Exchange ahead of a trading halt. Trading did not resume. (Reporting by Jonathan Stempel; Additional reporting by Dan Wilchins)