NEW YORK, April 30, 2018 /PRNewswire/ -- Five Oaks
Investment Corp. (NYSE: OAKS) ("Five Oaks" or the "Company")
announced today that it acquired 100% of the equity interests of
Hunt CMT Equity LLC (the "Transaction") from Hunt Mortgage Group
for an aggregate purchase price of approximately $68 million. Assets of Hunt CMT Equity LLC
include the junior retained notes and preferred shares of a
commercial real estate collateralized loan obligation ("CLO"), a
licensed commercial mortgage lender and eight (8) loan
participations.
The Transaction is part of the Company's previously announced
reallocation of capital into new investment opportunities in the
commercial real estate mortgage space. The Company believes
that it is a significant positive step in transitioning its
strategy to include transitional commercial mortgage loans which
are expected to be positive to stockholder returns while lowering
overall leverage. The Company funded the Transaction through
sales of residential mortgage-backed securities and available
cash.
The Transaction was, in accordance with the Company's related
party transactions policies and procedures, unanimously approved by
the Company's audit committee, which is comprised of all of the
independent directors of the board. In addition, the Company
obtained independent third-party valuation support for the
Transaction.
The assets of the CLO consist of performing transitional
floating rate commercial mortgage loans with a portfolio balance of
$346.3 million as of March 31, 2018, collateralized by a diverse mix
of property types, including multifamily, retail, office,
mixed-use, industrial and student housing. The securitization
pool is financed by $290.7 million of
investment-grade notes that bear a weighted-average cost of 138
basis points over one-month LIBOR, excluding fees and transaction
costs. The CLO has a replenishment period that allows
principal proceeds from repayments of the portfolio assets to be
reinvested in qualifying replacement assets, subject to certain
conditions. As of March 31,
2018, the CLO had $2.9 million
of cash available for reinvestment.
James Flynn, the CEO of Five
Oaks, stated, "This transaction provides the Company with
attractive floating rate investments which we anticipate will
produce higher returns for our investors while decreasing our
overall leverage. The CLO securitization acquired in the
Transaction provides the Company with competitive match term
financing with significant reinvestment capabilities. In
addition, the inclusion of a licensed commercial mortgage
originator will support the Company's continued growth in this
space."
Chris Hunt, Chairman of Five
Oaks, stated, "This transaction provides an important step towards
the Company's long term transition to a commercial mortgage focused
strategy. The CLO assets were all originated by an affiliate
of our manager and are indicative of the quality of assets we
envision the Company investing in moving forward."
Michael Larsen, the President of
Five Oaks, stated, "This Transaction is the first of what we
anticipate to be a series of similar ongoing investments by the
Company in the commercial mortgage space. As this transaction
shows, Hunt provides the Company with access to attractive
investments and financing that well position the Company as it
focuses on its new strategy. We are pleased to be able to
begin the process of reallocating the Company's capital and
executing transactions in line with the Company's new strategic
direction."
Dentons US LLP served as Five Oaks' legal advisors.
Clifford Chance LLP served as Hunt's legal advisors.
About Five Oaks Investment Corp.
Five Oaks Investment Corp. (the "Company") is a Maryland corporation that has historically
focused primarily on investing in, financing and managing
residential mortgage-backed securities, multi-family mortgage
backed securities, mortgage servicing rights and other
mortgage-related investments. Going forward, the Company
expects to increase its investments in the commercial real estate
mortgage space. The Company's objective remains to deliver
attractive cash flow returns over time to its investors.
Investors, security holders and other interested persons may
find additional information regarding the Company at the SEC's
Internet site at http://www.sec.gov/ or the Company website
www.fiveoaksinvestment.com or by directing requests to: Five Oaks
Investment Corp., 230 Park Avenue, 19th Floor, New York,
NY 10169, Attention: Investor Relations.
Five Oaks Investment Corp. is externally managed and advised by
Hunt Investment Management, LLC. More information regarding Hunt
Investment Management is described in its brochure (Part 2A of Form
ADV) available at www.adviserinfo.sec.gov.
Cautionary Statement Regarding Forward-Looking
Information
This communication contains forward-looking information about
Five Oaks and the Transaction. Forward-looking statements are
statements that are not historical facts. These statements
can be identified by the use of forward-looking terminology such as
"believe," "expect," "may," "will," "should," "project," "could,"
"plan," "goal," "potential," "pro forma," "seek," "intend" or
"anticipate" or the negative thereof or comparable terminology, and
include discussions of strategy, financial projections, guidance
and estimates (including their underlying assumptions), statements
regarding plans, objectives, expectations or consequences of
announced transactions, and statements about the future
performance, operations, products and services of Five Oaks and its
subsidiaries. Five Oaks cautions readers not to place undue
reliance on these statements. These forward-looking
statements are subject to a variety of risks and uncertainties.
Consequently, actual results and experience may materially
differ from those contained in any forward-looking statements.
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SOURCE Five Oaks Investment Corp.
