New Residential Investment confidentially filed a draft registration statement with the Securities and Exchange Commission on its intention to spin off its NewRez subsidiary in an
"Management had discussed this possibility on its third quarter earnings call so this filing is not a surprise," said Bose George, an analyst with Keefe, Bruyette & Woods in a note on the move. "At that time, the company also noted that an IPO could be a positive for New Residential's valuation since a mortgage bank could trade at a premium to book value."
The common stock of New Residential, which is a real estate investment trust that also owns mortgage-backed securities, was trading at 80% of its third quarter book value of $10.86 per share before the market opened on Nov. 20, George pointed out.
But even after the announcement, New Residential was trading below that mark, opening on Friday at $9.30 per share.
During New Residential's third quarter earnings call on Oct. 29, CEO Michael Nierenberg pointed to the mortgage companies that went public
"When we look at where those are trading, I am not going to compare us to
Besides Rocket,
LoanDepot also
NewRez is a mortgage lender and servicer that was acquired in New Residential's purchase of
Since the pandemic started, NewRez has been the bright spot for New Residential. The company earned $77.9 million in
New Residential originated $18.1 billion in the third quarter, up from $8.3 billion in the second quarter and $5.7 billion in the third quarter 2019.
The number of shares of common stock to be sold has not yet been determined, New Residential said in a press release. The initial public offering is expected to take place after the Securities and Exchange Commission completes its review process, subject to market and other conditions.