Activist investor backs hostile offer for HomeStreet multifamily unit

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Activist investor Blue Lion, which has been waging a campaign for changes at HomeStreet Bank, is pressing the Seattle-based company to consider selling its Fannie Mae multifamily mortgage operations.

Dwight Capital, a New York-based privately owned lender with a national footprint, issued a statement on May 22 in which it said it had communicated its interest to HomeStreet in acquiring the latter's multifamily mortgage business.

The Dallas-based investment firm owns more than 6% of HomeStreet's stock and last year Blue Lion was thwarted in its attempt to fight for seats on HomeStreet's board.

"Blue Lion expects the board to fully engage with Dwight Capital," the firm said in a statement issued Thursday.

HomeStreet has previously announced it would sell off the bulk of its single-family mortgage holdings to improve its profitability, but it wants to retain its Fannie Mae multifamily delegated underwriting and servicing operation.

"HomeStreet has been a Fannie Mae DUS lender and servicer since the initiation of the program by Fannie Mae over 30 years ago, and this business has and continues to be a profitable and important part of our commercial real estate holding business," Mark Mason, HomeStreet's chairman and CEO, said during the company's first-quarter earnings call.

Mason said HomeStreet's board would review Dwight Capital's offer and "respond as appropriate." HomeStreet's multifamily production volume in the first quarter was almost 60% higher year-over-year, but down by a little over 6% from the previous quarter at $142 million. The first quarter tends to be seasonally weak. Multifamily production volume was generally stable to higher at the company last year.

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M&A Multifamily HomeStreet Blue Lion Capital Fannie Mae