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New Firm to Invest in Agency RMBS

New Firm to Invest in Agency RMBSARMOUR, Enterprise to merge

July 29, 2009

By MortgageDaily.com staff

An investment firm and a real estate investment trust announced plans to merge and invest in agency securities.

A subsidiary of ARMOUR Residential REIT Inc. and Enterprise Acquisition Corp. will merge in an all-stock transaction, a press release today said. The $250 million deal, which is subject to approval by shareholders and warrant holders of Enterprise, is expected to close in the fourth quarter.

The merged company plans to invest in agency residential mortgage-backed securities backed by adjustable-rate mortgages, hybrid ARMs and fixed-rate mortgages. It hopes to leverage its investments by taking advantage of the superior credit quality of securities issued or guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

“This transaction is a great way to give our investors the opportunity to invest at just above book value when many similar mortgage REITs are valued at substantial premiums to book value,” said Enterprise President and Chief Executive Officer Daniel C. Staton in the statement.

Staton will become chairman of ARMOUR once the transaction is completed, while Jeffrey Zimmer will become president and Scott Ulm will become chief investment officer. Zimmer and Ulm will each hold the title of co-CEO.

The new entity will be managed and advised by ARMOUR Residential Management LLC.

Boca Raton, Fla.-based Enterprise said it “is a blank check company formed for effecting a merger, capital stock exchange, asset acquisition or other similar business combination with one or more operating businesses.”

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