$250m (+37.5m) sen unsec cb coming tonight from CS. Terms: 5yr, 5-5.5% up 10-15%, full pctns. UOP = acq assets/maintain REIT status. Portfolio = 20/80 commercial/residential (res 50:50 agency: non agency) Housing recovery has increased IVRs demand 4 riskier non agency. PF Debt = skewed by s/term repurchase agreements (cb only 1/term debt), cash = 889m, LTM ebitda = 574m, FCF = 428m. We’d assume B+ & L+500 ADV = 1.6m, no leaps, 2yr 90d 10/50 ile = 18/25, we’ll cap @20%. Theo = 101.25. Long only demand for res/mortgage exposure is trumping any valuation call. Any recent mortgage related name has traded to fv and thru: RDN, RWT, MHO, STWD, BKCC. This I am sure will follow suit but at some point this greater fool game will end and we do not want to be holding the keys.
REIT focused on residential and commercial MBS
PF Cash $889mm
PF Debt $15,970mm
LTM EBITDA = $574mm
LTM FCF = $428mm
Debt/equity = 6.2x
Market Cap = $2,858mm
IVR invests in both agency and non agency RMBS and CMBS. Have been shifting assets to non-agency from agency in recent quarters. As market fundamentals improve in housing market they expect trend to continue. CMBS also growing. YE12 agency accounted for 49% of equity, non-agency 29%, CMBS 21% – compared to 52%, 27% & 19% prev year. Inv port grew from $14B to $18B yoy. Proceeds from Jan equity offering & conv will fund add’l growth. Convert only long term debt, everything else short term repo agreements.
L+500