Angel Oak Mortgage, a real estate investment trust that buys unqualified mortgages from an affiliate, is the newest industrial company to go public.
The IPO size and pricing were not listed in the filing, despite using a $ 150 million wildcard for regulatory purposes. The company was unable to comment as it is in a quiet time.
In addition to the public offering, Angel Oak Mortgage has entered into a private placement agreement with CPPIB Credit Investments to purchase common shares for a total of $ 40 million at a price per share equal to the lower IPO price per share or book value per share.
Angel Oak Mortgage Lending, whose units do not come from QM, produced $ 516 million in the first quarter, after total annual production of $ 1.5 billion in 2020.
The REIT reported net income of $ 9.5 million for the first quarter, compared to a pandemic-related net loss of $ 36.7 million a year earlier.
At the end of the first quarter, the company had assets of approximately $ 534.9 million. This included non-QM loans of around USD 481.0 million, which were financed with multi-term securitisations as well as with storage lines and buyback facilities.
"We are able to primarily use an 'originator' model for obtaining credit which we believe has tangible value and differentiation from an 'aggregator' model. # 39; offers that depends on the creation and underwriting by third parties, "states the filing. "Angel Oak Mortgage Lending has control over the credit insurance process, the ability to obtain loans with our desired credit and return profiles, and access to loans from a diverse geographic presence and from a wide range of loan programs – so we can purchase in and out Investing loans with an attractive relative value. "
In the first quarter of 2020, but prior to the pandemic, Angel Oak Mortgages acquired 958 loans for a total purchase price of $ 389.1 million. Loan purchases were suspended between April and August 2020. Between September 1, 2020 and May 14, 668 loans were purchased for a total purchase price of $ 349.6 million.
Angel Oak Mortgage also invests in small commercial real estate loans, a niche that typically consists of properties less than 50,000 square feet in size and less than $ 5 to 10 million in value. Because of this, many lenders in space obtain their loans from residential real estate originators. In this sense, it is similar to non-QM, as both companies address those who want to be concerned with the decline in the origin of single-family homes.
In 2018, Angel Oak Commercial Lending, another sister company, acquired an interest in Cherrywood Mortgage to raise these loans.
And 2019 "was the most active year for non-QM, originating around $ 50 billion with Angel Oak consuming $ 3.3 billion," according to a research report by BTIG's Eric Hagen. "It has also built good liquidity as an issuer with more than $ 7.5 billion in securitized debt, of which the REIT currently bears the residual risk from four transactions in 2019 and 2020."
Currently, BTIG estimates that Angel Oak Mortgage is capitalizing around $ 1.5 billion in non-QM loans, making a portfolio size between two other publicly traded REITs: Ellington with $ 1 billion and MFA Financial with a portfolio of $ 2 billion . $ 2 billion.
Angel Oak Mortgage is managed by an affiliate of another affiliate, Angel Oak Capital Advisors, which recently completed the first non-agency securitization that qualified as a social bond offering.
"Angel Oak Capital is a private credit investor with over $ 10 billion in assets under management through mutual funds, private funds and separately managed accounts, with an emphasis on investing in residential and commercial mortgage loans," said Hagen . "The public REIT should complement the manager's $ 6.5 billion open-ended mortgage mutual fund."