Real estate investment trust Cherry Hill Mortgage Investment Corp. said Tuesday it has chosen not to sell parts of its business, instead bringing operations in-house.
Three months ago, the company had been considering several “strategic alternatives” to maximize shareholder value in light of the slowdown in lending activity. These options included a merger, a sale of all or part of the company's assets or “internalizing the company's management.”
With the assistance of an appointed committee, the REIT decided to terminate its agreement with Cherry Hill Mortgage Management, owned by Freedom Mortgage CEO Stanley Middleman, and “take all steps necessary to operate the company as a fully integrated, internally managed mortgage REIT,” Cherry Hill said in a press release.
Nonetheless, the special committee continues to consider other options and leaves open the possibility of a sale or merger in the future.
“There can be no assurance that the consideration of strategic alternatives will result in a transaction other than an internalization or other strategic outcome,” the REIT said. There is also no formal timeline for when the committee will stop considering strategic alternatives, it added.
Cherry Hill said progress on the internalization or “assessment of strategic alternatives” will not be made public until it is fully completed.
The REIT was originally formed as a publicly traded company in 2013 through a strategic partnership with Freedom Mortgage to acquire, invest in and manage mortgage assets, including servicing rights and securities guaranteed by government and non-government agencies.
Since its inception, the company has been led by CEO and President Jay Rowan, who also serves on the Cherry Hill Board of Directors, which currently includes Sharon Lee Cook, Robert Mercer Jr. and Joseph Murin as independent directors.
The company had $20 billion worth of outstanding mortgage servicing balances on its mortgage servicing book as of March 31, 2024. Cherry Hill posted net income of $9.7 million in the first quarter of 2023 after losing $35.5 million in the fourth quarter.