Business Context and Reporting Period
Company: Cherry Hill Mortgage Investment Corporation (Emerging Growth Company)
Filing Type: Form 8-K (Current Report)
Date of Report: August 10, 2017
Event Date: August 10, 2017 (Underwriting Agreement); August 16, 2017 (Articles Supplementary effective)
Context: The Company is a Real Estate Investment Trust (REIT) reporting the designation of new preferred stock and the execution of an underwriting agreement for a public offering.
Key Financial Metrics and Capital Structure
This filing details a capital raise rather than operational performance metrics. Key financial terms include:
- Security Issued: 8.20% Series A Cumulative Redeemable Preferred Stock.
- Liquidation Preference: $25.00 per share.
- Dividend Rate: 8.20% annually ($2.05 per share), payable quarterly.
- Shares Authorized: 2,530,000 shares designated.
- Shares Sold: 2,200,000 shares initially, plus 200,000 additional shares via partial option exercise (Total: 2,400,000 shares).
- Offering Price: $25.00 per share.
- Estimated Gross Proceeds: Approximately $60,000,000 (based on 2,400,000 shares at $25.00).
- Redemption: Non-redeemable prior to August 17, 2022, except for REIT qualification or Change of Control.
Material Changes Versus Prior Period
The filing does not provide comparative operational data (revenue, profit, cash flow) against prior periods. The material change is the expansion of the Company's capital structure through the issuance of Series A Preferred Stock and the corresponding amendment to the Operating Partnership agreement to issue matching Preferred Units.
Guidance, Outlook, and Risks
- Closing Status: The offering closing was expected on August 17, 2017, subject to customary conditions.
- Use of Proceeds: Net proceeds are expected to be contributed to the Operating Partnership in exchange for Series A Preferred Units.
- REIT Qualification: Ownership restrictions on the Preferred Stock are in place to preserve the Company's qualification as a REIT for U.S. federal income tax purposes.
- Voting Rights: Holders generally have no voting rights except under limited circumstances.
- Change of Control: Upon a Change of Control, holders may convert shares to common stock or the Company may redeem shares at $25.00 plus accrued dividends.
Investor Verification Checklist
- Verify the final closing date and actual net proceeds after underwriting discounts and expenses.
- Confirm the full exercise or expiration of the underwriters' option for the remaining 130,000 shares.
- Review the Articles Supplementary (Exhibit 3.1) for specific details on dividend payment mechanics and redemption triggers.
- Assess the impact of the new dividend obligation ($2.05 per share) on the Company's future distributable cash flow.
- Check subsequent filings for the actual contribution of proceeds to the Operating Partnership.