Capstead Turns Prepays Into Dividend

Capstead Mortgage, a real estate investment trust that invests in adjustable-rate mortgages, has seen so much of its portfolio prepay that it is sending cash back to investors.Capstead has announced that it will pay a dividend of $8.35 per common share on Jan. 21 to stockholders of record as of Dec. 31. The dividend combines the regular fourth-quarter dividend of $1.16 per share with a special dividend of $7.19 per share, representing about $100 million of the company's common stockholders' equity. Because of the size of the distribution, the shares will not trade ex-dividend until Jan. 22, 2003. Common stockholders who sell their shares after the record date, and through the payment date, will also be selling their right to receive the dividend. Wesley Edens, Capstead's chairman and chief executive officer, said that because of the steady decline in the size of Capstead's portfolio of ARM securities as a result of prepayments, the company's capital is not optimally utilized. The special dividend "should serve to enhance future returns on remaining common equity, particularly under current market conditions, while maintaining adequate liquidity to take advantage of investment opportunities as they arise," Mr. Edens said. The company can be found online at http://www.capstead.com.