|New Century to Convert to REIT
$3.4 billion March production
April 6, 2004
By MortgageDaily.com staff
|On the heels of announcements by other subprime mortgage lenders stating their intentions to convert to real estate investment trusts, one of the country’s largest has said it will follow suit. In the same breath, the company said its production jumped more than a quarter from the prior month.
New Century Financial Corporation announced yesterday that its board of directors voted in favor of converting the publicly traded company to a Real Estate Investment Trust, or REIT.
“We believe that by converting to a REIT we will be in a better position to achieve our long-term growth objectives and continue to increase shareholder value,” said CEO and chairman Robert K. Cole in the announcement.
News of the expected conversion by the Irvine, Calif.-based subprime company follows announcements last quarter of similar moves planned by subprime lenders Saxon Capital and Aames Financial Corp. Both Aames and Saxon said they intended to use proceeds from the conversions to finance real estate deals.
New Century said its decision to convert to a REIT was based on factors including “the potential for increased shareholder return, tax efficiency and ability to achieve growth objectives.”
New Century reported March production of $3.4 billion, up significantly from $2.5 billion reported in both February and January. A year ago the company reported $1.8 billion in fundings.
“We are on track to exceed our $30 billion 2004 production goal,” said company president Brad A. Morrice in the announcement.
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