Commercial mortgage real estate investment trust Criimi Mae Inc. has reported its third quarter results, and depending on which type of accounting is used in disclosing the information, the company posted either a profit or a loss.
Using what is known as generally accepted accounting principles (GAAP), Criimi Mae posted net earnings for the three months ending Sept. 30 of $8.1 million, compared with a third quarter 1998 loss of $8.7 million. However, using tax-basis accounting, Criimi Mae had an approximate loss of $17.8 million for the 1999 third quarter, compared with $19.9 million net earnings during the same time period last year.
Given the fact that company officials foresaw a net loss for the company for 1999 - and indeed filed for bankruptcy in October 1998 - Criimi's financial officers factored this into their 1999 accounting forecasts. Therefore, the GAAP method gave more favorable results for the company.
Criimi Mae spokesman James Pastore said that the numbers are reflective of when the actual loss was taken into account.
"What happens is that under GAAP accounting, Criimi Mae has been recognizing the loss over the past year," he said. "Under tax accounting, you recognize it at the time of the sale that generates the loss, and it actually took place in this last quarter [third quarter 1999]."
He added that this year's third quarter GAAP results only had to take into consideration $1.1 million of the overall loss, while tax-basis accounting had to consider $36.6 million of the loss.
In other Criimi Mae news, the U.S. Bankruptcy Court in Greenbelt, Md., has set a disclosure date for the bankruptcy reorganization plan that was filed by Criimi Mae and an affiliate of Apollo Real Estate Advisors IV LP in September for Dec. 6.
This is also the date set for a bidder-protection hearing with the Court that was originally scheduled for November 1. This hearing would give protection to Apollo's bid should another entity decide to bid for Criimi Mae's recapitalization.
At the postponement hearing Nov. 1, Apollo was awarded $400,000 for reimbursement of expenses related to expenses incurred regarding the bidding protection provisions in an agreement made between Criimi Mae and Apollo.