AIG-affiliated REIT files for IPO
Springleaf Real Estate Investment Trust, a spin off of government-supported American International Group ($44.96 0.07%), filed its plans for an initial public offering with the Securities & Exchange Commission Friday.
Springleaf primarily originates real estate loans secured by first and second mortgages on residential properties. The firm opened its doors 90 years ago as American General Finance.
The name of the company changed to Springleaf after private equity firm Fortress Investment Group ($7.26 -0.2%) purchased an 80% stake in November. AIG still owns the other 20%. Prior to its acquisition by Fortress, Springleaf was a wholly-owned indirect subsidiary of AIG.
According to a Renaissance Capital report, Springleaf booked $1.9 billion in sales last year. The SEC filing puts the total residential real estate loan value at $13.4 billion.
The company seeks to raise $500 million through the IPO.
"Upon completion of this offering, we will own a portfolio consisting primarily of seasoned, performing, first-lien residential real estate loans and performing, secured consumer loans," Springleaf said in the filing without disclosing the expected amount of shares to be offered.
"We believe Springleaf’s lending business is notable for its streamlined and straightforward product offerings and its conservative underwriting philosophy," the company said, adding it intends to hold loans to maturity.
IPOs of REITs are growing in the financial sectors, as firms look to capitalize on the tax-exemptions offered to public companies. The speculation is REITs will attempt to securitize mortgages they originate. Considering the on-balance treatment of securitizations today, this may still be an option for Springleaf.
The quality of the loans would be prime for such a vehicle as the company said in the SEC filing: "Springleaf has not offered non-traditional mortgage products such as low- or no-documentation loans, option adjustable-rate mortgage loans, greater than 100% loan-to-value ratio mortgage loans, or negative amortization loans."
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