Two Harbors Investment Corp. plans to offer 35,000,000 shares of its common stock in an underwritten public offering to buy more RMBS. The sale is subject to market and other conditions.
Aside from residential mortgage-backeds, the net proceeds from the offering will also be used to purchase residential mortgage loans and real properties as well as for other general corporate purposes, the firm said in a release.
The company has also granted the underwriters an option for 30 days to buy up to an additional 5,250,000 shares of common stock to cover overallotments. Credit Suisse is the lead book-running manager for the offering. Barclays Capital and JPMorgan Securities are the deal's book-running managers while JMP Securities and Keefe, Bruyette & Woods are the co-managers.
Like fellow REIT Redwood Trust, the firm has discussed securitizing Jumbo loans made mostly to affluent borrowers. But unlike Redwood, the firm has not come to market thus far with any deal given that very high quality mortgages underlying such RMBS are hard to come by since banks originating the loans now prefer to retain them on their books. See story.
In an 8-K filing back in January with the Securities and Exchange Commission (SEC), Two Harbors updated an earlier repurchase agreement with Barclays.
Back in May 2011, Two Harbors had said it will be working toward a $250 million RMBS using a warehouse to accumulate Jumbo mortgages.
There is no set timetable for the propective offering, although the Minnetonka, Minn.-based REIT plans to issue an RMBS once it amasses roughly $200 million of product, according to the January SEC filing.
The firm focuses on investing in RMBS with the aim to provide risk-adjusted returns to its investors over the long term, mainly via dividends and secondarily through capital appreciation. It purchases, owns and manages a portfolio of agency and non-agency RMBS and related investments. The firm's investment approach focuses on security selection and the relative value of various sectors within mortgages, the firm said in its Web site.