Angel Oak Mortgage REIT (NYSE: AOMR) has priced its public offering of $50.0 million of its 9.500% senior notes due 2029. The notes are guaranteed by Angel Oak Mortgage Operating Partnership, LP and will be issued in denominations of $25.00. Proceeds will be used for general corporate purposes, including the acquisition of non-qualified mortgage loans, and to repurchase approximately $20.0 million of common stock from Xylem Finance. The offering, which is expected to close on July 25, 2024, is being led by RBC Capital Markets, UBS Securities, Wells Fargo Securities and Piper Sandler as joint book-running managers. AOMR intends to list the notes on the NYSE under the symbol “AOMN.”
positive
Successful pricing of $50 million senior notes offering. The notes have an interest rate of 9.500%, attractive to income-seeking investors. Potential portfolio growth through planned non-qualified mortgage acquisitions. Potential stock appreciation through $20 million in share repurchases.
Negative
Issuing new debt increases a company's leverage and interest expenses. Share buybacks from a single investor could raise concerns about insider trading. If the bonds are converted into equity in the future, there is the potential for dilution to existing shareholders.
Angel Oak Mortgage REIT, Inc. (NYSE: AOMR) recently announced the pricing of $50 million of 9.500% senior notes due 2029. The issuance of these notes is a significant move given the high interest rate of 9.500%, which reflects the company's cost of capital in the current market environment, which could indicate either increased investor risk perception or the company's aggressive strategy to attract capital.
From a financial perspective, the use of the proceeds from this offering is crucial. Angel Oak plans to use the majority of the capital for general corporate purposes, including acquiring non-qualified mortgage loans. This is consistent with the company's existing strategy and should help grow its asset base. However, the reference to using $20 million to repurchase shares from Xylem Finance LLC suggests an effort to consolidate ownership or adjust its capital structure. The share repurchase could signal confidence in the company's stock price, but it could also be a move to boost earnings per share (EPS) in the near term.
For retail investors, it is essential to consider how these senior notes will affect the financial position and stability of the company: the 9.500% interest rate represents an annual interest expense, and as these senior notes are unsecured, they will be prioritized in the event of liquidation, impacting the risk profile of shareholders.
The announcement of the $50 million senior notes offering marks an interesting development in Angel Oak's market position: if approved, these notes will be listed on the NYSE under the symbol “AOMN,” providing transparency and liquidity and making it easier for investors to trade and evaluate the company's debt profile.
Additionally, the involvement of well-known underwriters such as RBC Capital Markets, UBS Securities and Wells Fargo suggests strong institutional interest and a degree of confidence in the offering. For investors, this provides further reassurance regarding the credibility and oversight of the process.
The strategic acquisition of non-qualified mortgages and other targeted assets represents a focused expansion strategy in niche markets that could provide significant growth opportunities, especially if the company can effectively leverage its proprietary mortgage lending platform.
Private investors should look at the performance of these new assets and their income generation potential versus the cost of servicing the new debt. The balance between growth and cost of capital is crucial in determining the long-term value proposition.
July 18, 2024 – 5:47pm
ATLANTA–(BUSINESS WIRE)–Angel Oak Mortgage REIT, Inc. (NYSE: AOMR) (the “Company”) announced today that it has priced an underwritten public offering of $50,000,000 aggregate proceeds of its 9.500% Senior Notes due 2029 (the “Notes”). The Notes will be fully and unconditionally guaranteed on a senior unsecured basis by Angel Oak Mortgage Operating Partnership, LP, through which the Company owns substantially all of its assets and conducts its operations. The Notes will be issued in minimum par amounts and integer multiples of $25.00 each. The underwriters of the offering do not have an over-allotment option to purchase additional Notes. The Company intends to use the majority of the net proceeds from this offering for general corporate purposes, which may include acquiring non-qualified mortgage loans and other targeted assets sourced primarily from the proprietary mortgage lending platform of an affiliate of the Company, or other targeted assets through the secondary market in a manner consistent with the Company's strategy and investment guidelines. In addition, the Company intends to use the net proceeds from this offering to repurchase approximately $20.0 million of the Company's common stock held by Xylem Finance LLC, an affiliate of Davidson Kempner Capital Management LP.
RBC Capital Markets, LLC, UBS Securities LLC, Wells Fargo Securities, LLC and Piper Sandler & Co. are acting as joint book-running managers for the offering. B. Riley Securities, Inc. and Janney Montgomery Scott LLC are acting as joint book-running managers for the offering.
The offering is expected to close on July 25, 2024, subject to the satisfaction of customary closing conditions. The Company intends to apply to list the notes on the New York Stock Exchange under the symbol “AOMN” and, if the application is approved, trading is expected to begin within 30 days after the completion of the offering.
The offering is being made pursuant to an effective registration statement and prospectus and related prospectus supplement, copies of which, when available, may be obtained free of charge on the SEC's website at www.sec.gov or by contacting the underwriters, RBC Capital Markets, LLC at (866) 375-6829 (toll free), UBS Securities LLC at (888) 827-7275 (toll free), Wells Fargo Securities, LLC at (800) 645-3751 (U.S. toll free), and Piper Sandler & Co. by email at fsg-dcm@psc.com.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities of the Company, nor shall there be any sale of the securities of the Company in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Forward-Looking Statements
This press release contains certain forward-looking statements that are subject to various risks and uncertainties, including, but not limited to, statements regarding the Company's business plans. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “strive,” “seek,” “anticipate,” “estimate,” “believe,” “likely,” “project,” “predict,” “project,” “continue,” or the negative of these words or phrases, or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe existing or future plans or strategies, include projections of results of operations, liquidity, and/or financial condition, or state other forward-looking information. The Company's ability to predict future events or circumstances, their effects, or the actual effects of existing or future plans or strategies, is inherently uncertain. Although the Company believes that such forward-looking statements are based on reasonable assumptions, actual results and future performance may differ materially from those expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's views only as of the date of this press release. Additional information regarding factors that could cause actual results or performance to differ materially from these forward-looking statements is included from time to time in the Company's filings with the Securities and Exchange Commission. Except as required by applicable law, neither the Company nor any other person assumes responsibility for the accuracy or completeness of any forward-looking statement. The Company undertakes no obligation to update the forward-looking statements contained in this press release as a result of new information, future events or otherwise.
About Angel Oak Mortgage REIT, Inc.
Angel Oak Mortgage REIT, Inc. (NYSE: AOMR) is a real estate finance company focused on acquiring and investing in first lien non-conforming mortgages and other mortgage-related assets in the U.S. mortgage market. The Company is externally managed and advised by affiliates of Angel Oak Capital Advisors, LLC, which, together with its affiliates, is a leading alternative credit manager with a vertically integrated mortgage origination platform.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240718949678/en/
Investor:
investorrelations@angeloakreit.com
855-502-3920
IR Agency Contact:
Nick Teves or Joseph Caminiti
Alpha IR Group
AOMR@alpha-ir.com
312-445-2870
Company Contact:
KC Kelleher, Angel Oak Mortgage REIT, Inc.
404-528-2684
kc.kelleher@angeloakcapital.com
Source: Angel Oak Mortgage REIT, Inc.
FAQ
What is the size and interest rate of Angel Oak Mortgage REIT's (AOMR) new senior debt offering?
Angel Oak Mortgage REIT (AOMR) has priced its public offering of $50.0 million of 9.500% senior notes due 2029.
What is the closing date for AOMR's senior notes offering?
The offering is expected to close on July 25, 2024, subject to customary closing conditions.
How does Angel Oak Mortgage REIT (AOMR) plan to use the proceeds from its senior debt offering?
AOMR intends to use the proceeds for general corporate purposes, including the acquisition of non-qualified mortgage loans and to repurchase approximately $20 million of its common stock from Xylem Finance.
What is the NYSE symbol for Angel Oak Mortgage REIT's (AOMR) new senior notes?
AOMR intends to list the new senior notes on the New York Stock Exchange under the symbol “AOMN.”