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CRIIMI MAE Services Completes Sale of Master and Primary Servicing Contracts

ROCKVILLE, MD (March 13, 2002) -- CRIIMI MAE Inc. (CMM) announced today that its commercial mortgage servicing subsidiary, CRIIMI MAE Services Limited Partnership (CRIIMI MAE Services), sold nine master and primary servicing contracts in February to an undisclosed buyer.

CRIIMI MAE Services said it sold the servicing rights and received $11.3 million in cash, which includes reimbursement for advances. CRIIMI MAE Services expects to record a gain on this sale of approximately $4.3 million in the second quarter of 2002. Subject to adjustment for certain post-closing contingencies, CRIIMI MAE Services may receive up to an additional $0.9 million from the sale in the third quarter of 2002.

The contracts sold by CRIIMI MAE Services provide for master and primary servicing of commercial mortgage-backed securities (CMBS) with a total unpaid principal balance of $2.1 billion. The Company had first announced its intent to sell the servicing contracts in December 2001.

After the sale of the CMBS contracts, CRIIMI MAE Services continues to be the designated special servicer for $18.4 billion of commercial mortgage loans underlying the Company's CMBS portfolio. CRIIMI MAE Services also continues to provide master and primary servicing on an insured mortgage securities portfolio of approximately $166 million and primary servicing on mezzanine loans totaling approximately $6.1 million.

Commenting on the sale, senior vice president of servicing Brian L. Hanson said, "We are pleased to announce the completion of this transaction. We decided to sell the nine contracts late last year because they were unprofitable, given the relatively small volume of master and primary CMBS servicing that we were performing at CRIIMI MAE Services. This part of the commercial mortgage servicing business is volume driven: significant economies of scale are needed to enhance profitability. The Company was not willing to commit the additional resources required to achieve volume growth."

In conjunction with the decision to sell master and primary servicing contracts for CMBS, CRIIMI MAE Services reduced its master and primary servicing staff by 34 employees, or 32 percent of its total mortgage servicing workforce. To account for employee severance costs, noncancellable lease costs, and other related costs, CRIIMI MAE recorded a restructuring charge in the fourth quarter of 2001 of approximately $438,000. In addition, the Company transferred six employees from the master and primary servicing departments to the special servicing department.


MortgageDaily.com
For further information, shareholders and securities brokers should contact Shareholder Services at 301-816-2300, e-mail [email protected], and news media contact James Pastore, Pastore Communications Group LLC, at 202-546-6451 or [email protected]

Note: Forward-looking statements contained in this release involve a variety of risks and uncertainties. Actual results could differ materially from those anticipated in forward-looking statements. These risks and uncertainties include the trends in the CMBS market; competitive pressures; the effect of future losses on the Company's need for liquidity; general economic conditions, restrictive covenants and other restrictions under the operative documents evidencing the Company's outstanding secured borrowings (including a repurchase agreement); results of operations, leverage, financial condition, business prospects and restrictions on business activities under documents evidencing the Company's secured borrowings, as well as the risks and uncertainties that are set forth from time to time in the Company's SEC reports, including its Annual Report on Form 10-K for the year ended December 31, 2000 and in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.

SOURCE:
CRIIMI MAE

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