TPG Mortgage Investment Trust (MITT) has agreed to acquire NYSE-listed peer Cherry Hill Mortgage Investment Corporation (CHMI) in a deal valued at $117.5m (€102m).
MITT, managed by TPG’s affiliate AG REIT Management, is offering CHMI stockholders 0.3063 MITT shares and $0.93 in cash per share, representing a 29% premium to CHMI’s last closing price.
Following completion of the deal, CHMI shareholders will hold an approximate 27% stake in the combined entity, which will continue to operate as TPG Mortgage Investment Trust under MITT’s existing management team. CHMI will also appoint two independent directors to MITT’s board.
The transaction will create a combined residential mortgage investment platform with a portfolio of $9bn.
In mid-morning trade, shares in both real estate investment trusts (REIT) hovered up within a 2% range, giving MITT and CHMI market capitalisations of $225.5m and $88.5m, respectively.
TJ Durkin, president, CEO and board member of MITT, said: “This combination represents a transformational, value-creating opportunity for both MITT and CHMI stockholders.
“We are excited to bring together two highly complementary portfolios to significantly enhance the scale of MITT’s residential mortgage platform, which we believe will generate meaningful operational efficiencies and deliver accretive earnings growth for the benefit of all stockholders.”
Joseph Murin, chairman of CHMI’s board of directors, said: “After conducting a thorough competitive process with the assistance of our financial advisor, the board unanimously determined that this transaction with MITT is in the best interest of CHMI and its stockholders.
“We believe this combination will unlock substantial value for all stockholders and we are excited about the value the combination can achieve.”
Jay Lown, CEO and board member of CHMI, said: “This transaction will deliver immediate cash consideration to CHMI stockholders, together with an opportunity to participate in the potential upside of the combined company.
“Our diversified portfolio of Agency RMBS and MSRs, combined with the support of TPG’s residential mortgage industry expertise, substantial resources, and record of successful integration of other REIT platforms, positions MITT well to drive long-term value for all stakeholders.”
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