FIVE OAKS INVESTMENT CORP. (NYSE:OAKS) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement and Related Item 2.01 Completion of Acquisition or Disposition of Assets.
On April 30, 2018, Five Oaks Investment Corp., a Maryland corporation (the “Company”), announced that it acquired one hundred percent (50%) of the equity interests of Hunt CMT Equity, LLC, a Delaware limited liability company (“Hunt CMT”) from Hunt Mortgage Group, LLC, a Delaware limited liability company (“HMG”) for an aggregate purchase price of $68.7 million (the “Transaction”).
Assets of Hunt CMT include junior retained notes and preferred shares of a commercial real estate collateralized loan obligation (“CLO”), a licensed commercial mortgage lender and eight (8) loan participations. The assets of the CLO consist of transitional floating rate commercial mortgage loans with a portfolio balance of $346.3 million as of March 31, 2018, collateralized by a diverse mix of property types, including multifamily, retail, office, mixed-use, industrial and student housing. As part of the Transaction, the Company also acquired an entity (“CLO Seller”), which holds $6.9 million of loan participations on eight loans held by the CLO.
The Transaction is part of the Company’s previously announced reallocation of capital into new investment opportunities in the commercial real estate mortgage space and the Company believes that it is a significant positive step in transitioning its strategy to include transitional commercial mortgage loans which are expected to be positive to stockholder returns while lowering overall leverage. The Transaction also provides the Company with commercial licenses necessary to operate as a direct lender and earn origination fees. The Company funded the Transaction through sales of residential mortgage backed securities and available cash.
The Transaction was effected to that certain Membership Interest Purchase Agreement, dated as of April 30, 2018, by and between HMG, and the Company (the “Purchase Agreement”). HMG is an affiliate of the Company’s external manager, Hunt Investment Management, LLC. Accordingly, the Transaction has been unanimously approved by the Company's Audit Committee, consisting entirely of independent directors of the board of directors of the Company. In addition, the Company obtained independent third-party valuation support for the Transaction.
As part of the Transaction, the Company has committed to indemnify and reimburse HMG for all of its future indemnification and guaranty obligations relating to mortgage assets originated by HMG and its affiliates in connection with the (i) funding commitments of CLO Seller under various participation agreements and (ii) sale of mortgage assets by CLO Seller to an affiliated entity.
The Purchase Agreement contains customary representations and warranties of the parties and indemnification provisions. The representations and warranties were made by the parties thereto and solely for their benefit. Accordingly, shareholders should not rely on such representations and warranties. The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the agreement, which the Company intends to file as an exhibit to its quarterly report on Form 10-Q.
Item 7.01 Regulation FD Disclosure
On April 30, 2018, the Company issued a press release announcing the consummation of the Transaction. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 7.01 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), regardless of any general incorporation language in such filing.
This Current Report on Form 8-K contains certain “forward-looking statements,” as such term is defined in Section 27A of the Securities Act and Section 21E of the Exchange Act and such statements are intended to be covered by the safe harbor provided by the same. Words such as “believe,” “expect,” “may,” “will,” “should,” “project,” “could,” “plan,” “goal,” “potential,” “pro forma,” “seek,” “intend” or “anticipate” or similar expressions are intended to identify forward-looking statements.These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements; the Companycan give no assurance that theirexpectations will be attained. The Companyundertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
Item 9.01 Financial Statements and Exhibits
|99.1*||Press Release, dated April 30, 2018|
Five Oaks Investment Corp. ExhibitEX-99.1 2 tv492359_ex99-1.htm EXHIBIT 99.1 Exhibit 99.1 Five Oaks Investment Corp. Commences Transition in Strategy with Acquisition of a Commercial Real Estate Loan Portfolio and Originator Acquisition a first and significant step in transitioning the strategy of the CompanyNEW YORK,…To view the full exhibit click
About FIVE OAKS INVESTMENT CORP. (NYSE:OAKS)
Five Oaks Investment Corp. is a real estate investment trust. The Company is focused on investing on a leveraged basis in mortgage and other real estate-related assets, particularly residential mortgage loans and mortgage-backed securities (MBS). The Company invests in various assets, such as Agency residential MBS (RMBS); securitizations backed by multi-family mortgage loans, or Multi-Family MBS; residential mortgage loans and other mortgage-related investments, including mortgage servicing rights (MSRs), and Non-Agency RMBS. The Company finances its investments in Agency RMBS, Multi-Family MBS, residential mortgage loans and Non-Agency RMBS primarily through short-term borrowings structured as repurchase agreements. The Company is externally managed and advised by Oak Circle Capital Partners LLC.