PennyMac REIT Raises Funds to Buy Distressed Mortgages
Newly formed mortgage real estate investment trust (REIT) PennyMac Mortgage Investment Trust on Wednesday announced the pricing of its initial public offering (IPO) of 16m common shares at $20 apiece for a total $320m. The trust plans to trade on the New York Sock Exchange under the symbol "PMT." The trust said it expects $335m in gross proceeds from the IPO, and plans to use net proceeds to purchase residential mortgage loans and other mortgage-related assets, a substantial portion of which may be distressed. "Market prices of mortgage loans have declined significantly during the current economic downturn due, in large part, to increasing rates of borrower defaults and falling values of real estate collateral," PennyMac said in a Securities and Exchange Commission filing this week. "Many depository institutions and other holders of portfolios of distressed mortgage loans in the US are under financial duress and may be motivated to sell these loans directly or through recently announced government programs." PennyMac said it plans to acquire these distressed mortgage loans and, through a network of special servicing expertise, rehabilitate them into sustainable performing loans. Merrill Lynch & Co. and Credit Suisse Securities with Deutsche Bank Securities serve as the joint book-running managers for the offering. Write to Diana Golobay.