Benefit Street Partners acquires Capstead Mortgage Corporation

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Benefit Street Partners Realty Trust, a privately held but publicly listed company, plans to acquire Capstead Mortgage Corp. in a deal that will make the combined venture the fifth-largest real estate investment trust with nearly $ 2 billion in capital.

Holders of Capstead common stock will receive a cash payment of 15.75% of the premium over its diluted book value per share. In addition, they will receive BSPRT common shares calculated on the basis of the adjusted book value based on the date not yet determined to confirm the closure of the transaction. (The book values ​​of companies reflect their assets minus certain liabilities.) The move initially boosted Capstead’s publicly traded shares, which surged to $ 6.53 a share Monday afternoon, up from $ 6.41 when the market opened.

The proposed acquisition points to an interesting strategy in which a player from the commercial sector who remained active throughout the period pandemicRussia’s objectives will be to use the liquidation of the assets of the mortgage company to move up several notches in the ranking. IN commercial market prospects positive this year.

Capstead’s portfolio of short-term adjustable rate mortgages will be converted to commercial loans upon acquisition. The BSPRT estimates that it will take about a year to liquidate the portfolio.

“I think this is achievable in about 18 months, plus or minus six months in either direction, depending on the flow of transactions,” said Mike Comparato, head of the real estate group at BSPRT, in a telephone conversation with an investor when asked how long ARM portfolio liquidation may take.

The new combined company will be named Franklin BSP Realty Trust. External Manager BSPRT is a subsidiary of Franklin Resources. (The parent company also does business under the name Franklin Templeton.)

Capstead operates a portfolio of ARM guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. WEAPONS made up small share of the mortgage market due to low rates,

BSPRT is the 10th largest equity-based commercial mortgage REIT including preferred shares.



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