Two Harbors Investment Corp. is spinning out its commercial real estate lending business to a newly created real estate investment trust, Granite Point Mortgage Trust Inc.
Granite Point will originate, invest in and manage a portfolio of commercial real estate loans and other forms of debt secured by commercial properties. It will be externally managed by Pine River Capital Management, which is the parent company of Two Harbors' external manager.
The new company has filed for an initial public offering. Simultaneous to its closing, Two Harbors will contribute its commercial real estate assets to Granite Point. In exchange, Two Harbors will receive some of Granite Point's common stock, with the amount to be determined by the value of the portfolio and other assets being contributed to Granite Point and the amount of capital raised in the proposed IPO.
Those Granite Point shares will be distributed as part of a special dividend to Two Harbors' shareholders after the expiration of the lock-up period.
Two Harbors exited the private-label residential mortgage-backed securitization business last August. After the spin-out, Two Harbors will concentrate on a residential mortgage finance oriented business strategy, a presentation accompanying the announcement said.
It is a simpler and efficient business model with the potential for greater returns.
Two Harbors' target assets include both agency and nonagency MBS investments, mortgage servicing rights and other mortgage credit assets, the presentation said.