Key facts
- TPG Mortgage Investment Trust (MITT) will acquire Cherry Hill Mortgage Investment Corp. (CHMI).
- The deal values Cherry Hill at approximately $117.5 million, representing a 29% premium.
- Cherry Hill stockholders will receive 0.3063 shares of MITT stock and $0.93 in cash per share.
- The combined entity will manage a $9 billion residential mortgage REIT platform.
- The transaction is projected to yield $7 million to $9 million in annual operating efficiencies.
- The merger is anticipated to close in the fourth quarter, subject to approvals.
TPG Mortgage Investment Trust Inc. (MITT) has agreed to acquire Cherry Hill Mortgage Investment Corp. (CHMI) in a cash-and-stock transaction valued at approximately $117.5 million. The deal is set to create a significant residential mortgage real estate investment trust (REIT) platform with a combined investment portfolio of $9 billion.
Under the terms of the merger agreement, Cherry Hill stockholders will receive 0.3063 shares of MITT common stock and $0.93 in cash for each share of CHMI common stock. This equates to $3.10 per Cherry Hill share, representing a 29% premium over MITT's closing price on Friday.
This acquisition follows MITT's purchase of Western Asset Mortgage Capital Corp. in 2023. T.J. Durkin, President and CEO of MITT, stated that the merger is a "transformational, value-creating opportunity" expected to yield operational efficiencies and accretive earnings. Durkin will continue to lead the combined entity, which will expand its board to eight members with the addition of two independent directors from Cherry Hill.
The combined company's $9 billion portfolio will be approximately 72% in nonagency residential credit, 14.4% in agency residential mortgage-backed securities and mortgage servicing rights (MSRs), 12.6% in home equity, and 1% in other investments. The transaction is projected to generate $7 million to $9 million in annual operating efficiencies through cost savings and a more favorable expense ratio.
On a pro forma basis, MITT stockholders are expected to hold about 73% of the combined company, with Cherry Hill stockholders owning approximately 27%. Cherry Hill CEO Jay Lown noted that the deal provides immediate cash consideration for CHMI stockholders and an opportunity to share in the combined company's future upside. The companies highlighted the complementary portfolios and TPG's mortgage expertise as key strengths.
The transaction has received unanimous approval from both boards and is expected to close in the fourth quarter, pending shareholder and regulatory approvals. The combined entity will continue to operate as TPG Mortgage Investment Trust Inc. and remain listed on the New York Stock Exchange under the MITT ticker, with its headquarters remaining in New York.