MFA Monetary buys extra stake in fix-and-flip lender Lima One

Real estate investment trust MFA Financial announced Thursday that it plans to acquire an additional stake in residential lender and service provider Lima One Holdings from affiliates of hedge fund Magnetar Capital.

MFA said it would use cash to make the purchase but otherwise did not disclose the financial details of the deal, thereby re-taking control of "essentially all" of Lima One's assets, including Fix-and-Flip's origins would construction and rental home loans.

The REIT said it is increasing its stake in Lima One because it believes the return on business loans is compelling and wants a reliable source of those mortgages available. Lima One is well on its way to borrowing at least $ 1 billion for business purposes this year. At $ 900 million as of March 31, BPLs represented approximately 15.5% of MFA's total investment portfolio.

"Business lending is one of the most attractive mortgage investments we see in residential loans, but these high-quality, high-yielding credit assets are difficult to obtain," said Gudmundur Kristjansson, co-chief investment officer of MFA, in a press release .

MFA plans maintain the current Lima One leadership team and the Greenville, SC-based operating platform. The transaction will close in the third quarter, subject to the necessary regulatory approvals.

The REIT originally acquired a minority stake in Lima One in 2018 and has been buying entire loans from the company since 2017. MFA currently has a 43% interest in Lima One and a preferred stock investment of $ 22 million.

MFA on Thursday reported net income of $ 77.3 million for the first quarter compared to $ 37.6 million in the previous quarter and a net loss of $ 914.2 million a year ago. The result was determined by net interest income and fair value loan gains in its investment portfolio.

“Much of the noise reported in our net results over the past few quarters, due to volatile changes in asset prices and cash flow estimates due to uncertainties surrounding the longer-term effects of COVID-19, has resolved and is lying Hopefully largely behind us, "said CFO Steve Yarad during the company's earnings call.

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