American Capital Mortgage Investment Corp.
filed for an initial public offering this week to raise up to $500 million in common stock.
The Bethesda, Md.-based company plans to invest in and manage a leveraged portfolio of agency mortgage investment, nonagency mortgage investments and other mortgage-related investments, according to a Securities and Exchange Commission
filing. American Capital will be taxed as a real estate investment trust.
"We intend to finance our assets, subject to market conditions, through a combination of financing arrangements, including but not limited to, repurchase agreements, warehouse facilities, securitizations and term financing facilities," the REIT said in a regulatory filing.
The trust said the "changing regulatory landscape" coupled with the declining roles of government-sponsored enterprises Fannie Mae
and Freddie Mac
"should present attractive investment opportunities for us in both agency and nonagency mortgage assets."
Changes in the housing environment, the trust said, could benefit the REIT's activities.
"We believe risk-retention rules and requirements for regulated institutions to hold more capital to withstand future recessions or significant declines in home prices may significantly change mortgage origination and distribution and provide opportunities for intermediaries and investors. We also believe that we may benefit from the expected curtailment of government support for housing that could begin as early as this year."
REITs have raised approximately $6.6 billion in new capital
since December 2010, according to a new report from Barclays Capital
. Barclays reckons this will translate into about $40 billion to $65 billion of agency mortgage-backed security demand.
The new American Capital Mortgage Investment will be externally managed and advised by American Capital MTGE Management
, also out of Bethesda. The firm currently manages $23 billion in assets.
In terms of risks for investors, the REIT noted that the management agreement that it expects to enter into "will be negotiated between related parties, and we will not have the benefit of arm’s-length negotiations of the type normally conducted with an unaffiliated third party."
The REIT's manager is a wholly owned subsidiary of American Capital Mortgage Management, the parent company of the external manager of American Capital Agency Corp.
, a publicly traded REIT that also invests in agency mortgage investments. "As a result, American Capital Agency Corp. may compete with us for acquisitions of agency mortgage-related investments," the regulatory filing noted.
was named the primary underwriter on the IPO. American Capital Mortgage Investment is expected to trade on the Nasdaq under the symbol MTGE.
Write to Christine Ricciardi
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