It's no wonder Imperial Credit Commercial Mortgage Investment Corp. rebuffed a bid from Wilshire Real Estate Investment Trust, analysts said.

After all, Wilshire REIT, which is controlled by distressed-asset specialist Wilshire Financial Services Group, was offering only $400 million-more than the Imperial REIT's market value but less than it's book value.

The price Wilshire offered for the Imperial REIT was "totally unattractive, except to" Wilshire, said Joe Jolson, analyst at NationsBanc Montgomery Securities.

Charlotte Chamberlain, analyst at Jeffries & Co., likened the bid to "a bad W.C. Fields joke. First prize: $700 million in illiquid mortgage assets. Second prize: $1.1 billion in illiquid mortgage assets."

But the attempt to take over a larger, better-capitalized REIT was not surprising, given the capital drought that mortgage REITs and specialty finance companies are suffering, the analysts said.

"Wilshire's REIT doesn't have any money," Mr. Jolson said. "In the last few weeks the capital markets for specialty finance companies have gone down the tubes, and Wilshire is vulnerable."

According to BT Alex. Brown, mortgage REIT shares have fallen 32% this year, and 14% in the last month alone. Raising common equity is not an option right now for the trusts. At the same time, spreads on asset-backed bonds have widened severely, making securitization a tough sell.

Wilshire announced its offer late last week. Imperial rejected it Monday. Friedman, Billings, Ramsey & Co., which took both REITs public, advised the Imperial trust on the matter.

Andrew A. Wiederhorn, chairman and chief executive officer of Wilshire, did not return phone calls by press time. Last week he told American Banker that Imperial's REIT had not been investing its capital adequately and that his management team could do a better job managing its capital and assets.

Imperial has seen its fair share of trouble recently. The REIT is managed by Imperial Credit Industries Inc., a finance company spun off from Imperial Bancorp in 1992. The bank owns 23% of Imperial Credit, which in turn owns 8.9% of the REIT.

Last week, Imperial Credit said it would report a third-quarter loss of up to $75 million. The week before, Imperial Bancorp said it would postpone the spinoff of yet another subsidiary because of the slide in Imperial Credit's stock price.

Both REITs invest in commercial mortgages, mortgage-backed securities, and real estate. Imperial's portfolio is seen as being more "plain-vanilla" than Wilshire's.

Imperial also established a "poison pill" designed to discourage hostile bidders. With mortgage REIT stocks trading at discounts to book value, the trusts are "theoretically prone to takeover attempts," explained Michael Meltzer, chief financial officer of the Imperial REIT.

Mr. Meltzer said that of the 1,400 loans his REIT has acquired to date, more than 1,000 were originated by Southern Pacific Bank, another unit of Imperial Credit Industries.

He acknowledged that the problems plaguing Imperial Credit and its subsidiaries "could affect future originations to the extent that it impacts the capital of those organizations. But I don't know if that's the case at this point."

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