NEW YORK--(BUSINESS WIRE)--Two Harbors Investment Corp. (NYSE: TWO), a leading hybrid mortgage real estate investment trust, today announced it has entered into an agreement to contribute its equity interests in TH Commercial Holdings LLC to Granite Point Mortgage Trust Inc. simultaneously with the closing of Granite Point’s initial public offering (“IPO”) of its common stock. The $651 million in equity interests to be contributed include Two Harbors’ portfolio of commercial real estate assets of approximately $1.8 billion, related secured indebtedness of approximately $1.2 billion and net working capital of approximately $0.1 billion, subject to a post-closing adjustment.
In exchange for the contribution, Granite Point will issue to Two Harbors approximately 33.1 million shares of common stock of Granite Point, which will represent approximately 76.5% of the outstanding stock of Granite Point after the IPO. The shares received by Two Harbors will be subject to a 120 day lock-up period following the closing of the IPO, after which Two Harbors anticipates that it will distribute the shares to Two Harbors’ stockholders by means of a special pro rata dividend, subject to the discretion and approval of its Board of Directors and in compliance with applicable securities laws. In connection with the Granite Point IPO, Two Harbors also agreed, subject to certain conditions, to purchase up to $20 million of Granite Point common stock in the open market at designated prices pursuant to a share purchase program that will extend for a period commencing four full calendar weeks after the IPO and ending on the earlier of the date on which all the capital committed to the plan has been exhausted or the date preceding the ex-dividend date associated with Two Harbors’ declaration of the pro rata distribution of Granite Point’s common stock to Two Harbors’ stockholders, but no later than December 31, 2017. Two Harbors does not intend to distribute any shares it acquires through the share purchase program to stockholders as part of the special dividend.
Granite Point was formed by Two Harbors in order to continue and expand the commercial real estate lending business established by Two Harbors. Granite Point will focus on directly originating, investing in and managing a portfolio of commercial real estate loans and other debt and debt-like instruments. Granite Point will be externally managed by Pine River Capital Management L.P., which is the parent company of Two Harbors’ external manager.
The Board of Directors of Two Harbors formed a committee of independent directors to review, negotiate and approve the Granite Point transaction. Freshfields Bruckhaus Deringer LLP served as legal counsel to the Special Committee and Credit Suisse served as financial adviser to the Special Committee with respect to the proposed contribution and to represent the interests of Two Harbors and its stockholders with respect to the proposed transaction. The contribution remains subject to satisfaction of all conditions to the closing of the transaction set forth in the agreement, including the completion of the Granite Point IPO.
Two Harbors Investment Corp.
Two Harbors Investment Corp., a Maryland corporation, is a real estate investment trust that invests in residential mortgage-backed securities, mortgage servicing rights, commercial real estate and other financial assets. Two Harbors is headquartered in New York, New York, and is externally managed and advised by PRCM Advisers LLC, a wholly owned subsidiary of Pine River Capital Management L.P. Additional information is available at www.twoharborsinvestment.com.
