Business Context and Reporting Period
This Form 8-K was filed by New York Mortgage Trust, Inc. (the "Company") on July 22, 2015. The filing discloses a significant strategic transaction involving the contribution of equity interests and the sale of a portfolio of assets to RiverBanc Multifamily Investors, Inc. ("RMI").
Key Financial Metrics and Transaction Details
- Equity Contribution: The Company agreed to contribute 100% of its common and preferred equity interests in RB Multifamily Investors LLC ("RBMI") to RMI.
- Consideration for Equity: In exchange, the Company will receive 2,451,211 shares of RMI common stock, with an expected initial aggregate value between $46.6 million and $49.0 million, contingent on RMI's IPO price.
- Asset Sale: The Company and its subsidiary, RB Commercial Mortgage LLC, agreed to sell a portfolio of assets to RMI for approximately $28.5 million in cash.
- Asset Composition: The sold portfolio includes five preferred equity investments in multifamily apartment properties (one under contract) and one mezzanine loan secured by a multifamily property.
- Ownership Stake: Upon completion, the Company expects to beneficially own approximately 37% of RMI's common stock.
Material Changes and Conditions
The transactions are subject to closing conditions, primarily the completion of RMI's initial public offering. The closing is expected to occur substantially concurrently with RMI's offering. Additionally, the Company agreed to waive a provision in its management agreement with RiverBanc LLC that would have otherwise prevented RiverBanc LLC from advising RMI.
Management Commentary and Risks
RMI is expected to be externally managed by RiverBanc LLC, which also manages the Company's investments in multi-family commercial mortgage-backed securities and certain commercial real estate-related debt investments. The Company holds a 20% equity interest in RiverBanc LLC. The cash consideration for the asset sale represents the aggregate principal balance of the assets outstanding (or expected to be outstanding) plus accrued but unpaid preferred returns as of the sale date.
Investor Verification Checklist
- Verify the final IPO price of RMI to determine the exact value of the stock consideration received.
- Confirm the successful completion of RMI's initial public offering as a condition precedent to closing.
- Review the specific terms of the waived provision in the management agreement with RiverBanc LLC.
- Assess the impact of the 37% ownership stake in RMI on the Company's future earnings and balance sheet.