Two real estate investment trusts are struggling to survive, while a construction lender advised mortgage brokers that it ran out of money to lend. The acquisition of a New Jersey bank was canceled — though another suitor has emerged, and investors of an East Coast mortgage operation project a bright future.
Excitement over the news that Thornburg Mortgage Inc. had obtained a reprieve from lenders on margin calls through a one-year repurchase override agreement subsided as the company subsequently disclosed it must raise at least $948 million in new capital at 12 percent within seven business days. The disclosure sent Thornburg shares up 50 percent to $1.50 yesterday.
The Santa Fe, N.M.-based REIT made the deal with counter-parties that hold $5.8 billion of its borrowings, including units of Bear Stearns, Citigroup, Credit Suisse, Greenwich Capital, Royal Bank of Scotland PLC and UBS Securities LLC.
“After careful consideration of our available options, given the continued challenges in the mortgage securities markets, the company’s board of directors determined that the override agreement and this proposed capital raise and warrants offerings, though highly dilutive for existing shareholders, are in the best long-term interest of the company,” Thornburg President and Chief Executive Officer Larry Goldstone said in the announcement.
Greater Community Bancorp will not be acquired by Oritani Financial Corp., as the two had agreed on Nov. 13, 2007, according to an announcement. Greater Community will pay Oritani $700,000 under a mutual termination agreement, which Oritani’s board of directors concluded was best for shareholders.
Oritani Chairman, President and Chief Executive Officer Kevin Lynch explained that shareholder opposition and dramatic deterioration in banking industry valuations since striking the deal led to the decision.
But $12.7 billion Valley National Bancorp has agreed to acquire Totowa, N.J.-based Greater Community in a $167 million deal expected to close in the third quarter. Subsidiary Greater Community Bank, with $1.0 billion in assets and 16 branches, will be merged in to the Wayne, N.J.-based acquirer’s 176-branch subsidiary, Valley National Bank.
The proposal reportedly has the blessing of a Greater Community stockholder with 10 percent of its shares.
The Federal Reserve Board announced Wednesday the termination of a cease and desist order dated May 6, 2004, against CABÂ Holding LLC.
Origen Financial Inc. reported the sale of $176 million in loans. The Southfield, Mich.-based REIT originates and services manufactured housing loans.
Origen, however, disclosed that its independent registered public accounting firm, Grant Thornton LLP, raised doubt in its 2007 financials about its ability to continue as a going concern. The company indicated, though, that it will likely meet its existing debt obligations.
“Based on the intrinsic value of Origen’s assets and discussions it has had with third parties about possible strategic alternatives, Origen believes it will be able to raise the additional funds it needs on a timely basis,” a press release stated.
Bellevue, Wash.-based Bismark Mortgage Co. has posted a message on its Web site saying it has halted new business. The company funded new construction financing from “all 50 states” up to 80 percent loan-to-value with no mortgage broker approval requirements.
“BMC is a private portfolio construction lender,” the message said. “As of Friday, March 14, 2008, our portfolio became full. Thus, all loan products have been temporarily suspended.”
About 15 employees were impacted by Bismark’s closing.
Middleburg Financial Corp. announced today that it will not need to guarantee $15 million in bank debt for Southern Trust Mortgage LLC, as it believed it would last year, a statement said. Middleburg owns 42 percent of Southern Trust and expected to write down $5 million of its nearly $10 million carrying value during December.
Middleburg noted it participated in Southern Trust’s warehouse lending during the first quarter, provided a $5 million line-of-credit to the unit and raised $1 million in a preferred equity offering.
“The STRATMOR Group noted that the company remains an attractive production franchise primarily due to an experienced management team with an excellent track record and the company’s positioning as a primarily retail lender in the favorable Mid-Atlantic and Carolina mortgage markets,” Middleburg stated. “The long-term future is bright for Southern Trust Mortgage.”
