[Update 1 clarifies details around Punch Taverns’ effort to pursue a REIT structure.] Newly-organized real estate investment trust (REIT) Two Harbors Investment Corp. today unveiled plans to acquire public investment vehicle Capitol Acquisition Corp. (CLA). The new REIT will focus on residential mortgage-backed securities (RMBS) and will operate under the management of PRCM Advisers, a subsidiary of Pine River Capital Management. The transaction’s completion is expected by the end of the third quarter. “We are excited to partner with Pine River and their veteran team with a proven track record of investing in residential mortgage backed securities,” says Capitol CEO Mark Ein — who becomes vice chairman of the new REIT — in a media statement today. “We believe that Two Harbors,” he adds, “as a newly formed REIT, created at or near book value with no legacy assets, will be well positioned to generate attractive risk-adjusted returns.” REITS in the US RMBS space might be expanding and merging like Two Harbors’ situation, but such is not the global case. The commercial REITs space in England, for example, is tight as commercial firms face liquidity constraints. Punch Taverns, a group that owns thousands of pubs, said in September 2008 it received clearance to pursue a REIT structure, but it would prioritize maintaining its balance sheets while any reorganizational steps are considered. This year, it means selling assets. Punch Taverns on Tuesday agreed to sell 11 of its pubs to Greene King for £30.4m ($50.37m). The transaction should close July 1, putting the pubs — located in central London, southeast of England and Scotland — in Greene King’s hands. “This transaction is in line with our stated strategy of increasing free cash flow and reducing the overall level of our debt, whilst seeking to maintain investment in our high-quality pub estate,” chief executive of Punch Taverns Giles Thorley said in a media statement on the disposition. Punch Taverns in late March sold six pubs to Fuller’s for $29.77m. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.