Walters Investment buys $6.3 million residential mortgage pool
The Tampa, Fla.-based REIT, Walter Investment Management (WAC), finalized the purchase of a pool of residential first-lien mortgages by using $6.3 million of proceeds from equity offerings. This transaction completes the $20 million of loans announced under letters of intent and comes less than a week after the purchase of Marix Servicing from Marathon Asset Management. The purchase of Marix makes Walter Investment one of the largest servicers of sub-prime mortgages in the nation. Walter participates in mortgage-backed securitization via its Mid-State Trust vehicles and also offers investor services through its Hanover Capital unit. The $6.3 million pool includes mostly performing, fixed-rate and adjustable-rate mortgages located within the southern U.S. Walter Investment "anticipates this asset purchase will provide an unlevered return to shareholders in excess of its minimum return hurdles," according to a statement on the deal. The company holds $1.9 billion of assets under management, with annual revenue of approximately $180 million. At June 30, the REIT had $79.3 million in cash and no borrowings under a $15 million revolving-credit line. In an investor call on its second-quarter earnings, chief operating officer Charles Cauthen said, "the diligent efforts of our field-servicing organization continue to yield superior results from our portfolio. Based on the early performance of our newly acquired loan pools, we expect continued superior performance from both our existing portfolio and these newly purchased pools." Net interest income for Q210 was $20.9 million, down from $22 million a year earlier. During the quarter, Walter Investment completed the purchase of two pools of performing, fixed-rate residential loans on single-family, owner-occupied residences using $19.7 million of proceeds from a 2009 equity offering. Write to Jacob Gaffney.