Two Harbors Investment Corp. plans to offer 35 million additional shares of its common stock in a public offering, using the proceeds to buy additional MBS. The sale is subject to market and other conditions.
Aside from residential mortgage-backed securities, the net proceeds from the offering will be used to purchase residential mortgages and real properties as well as for other general corporate purposes, the firm said in a press statement.
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 and some other companies, 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.
In an 8-K filing back in January with the Securities and Exchange Commission, Two Harbors updated an earlier repurchase agreement with Barclays.
Back in May 2011, Two Harbors had said it would be working toward a $250 million RMBS using a warehouse to accumulate jumbo mortgages.
There is no set timetable for the prospective 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.
