Cherry Hill Mortgage Investment Corp - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Cherry Hill Mortgage Investment Corporation on April 5, 2018. The filing reports the entry into material definitive agreements and amendments to the Company's Articles of Incorporation to facilitate an equity offering.
Key Financial Metrics and Capital Structure
The filing does not provide specific revenue, profit, cash flow, or debt metrics for a reporting period. Instead, it details the following capital structure changes:
- Offering Capacity: The Company may offer and sell up to $35,000,000 of 8.20% Series A Cumulative Redeemable Preferred Stock.
- Share Authorization: The Company authorized an additional 1,270,000 shares of Series A Preferred Stock, bringing the total authorized issuance to 3,800,000 shares.
- Dividend Rate: The Series A Preferred Stock carries an 8.20% cumulative dividend rate.
- Liquidation Preference: The corresponding Preferred Units in the Operating Partnership have a liquidation preference of $25.00 per unit.
- Commission: Agents (B. Riley FBR, Inc. and JMP Securities LLC) are entitled to a commission of 1.575% of gross proceeds.
Material Changes
On April 5, 2018, the Company executed the following material changes:
- Entered into At Market Issuance Sales Agreements with B. Riley FBR, Inc. and JMP Securities LLC to sell Preferred Stock via "at the market" offerings.
- Filed Articles Supplementary with the State of Maryland to classify and designate 1,270,000 additional shares of authorized preferred stock as Series A Preferred Stock.
- Amended the Agreement of Limited Partnership of Cherry Hill Operating Partnership, LP to allow for the issuance of 1,270,000 Series A Preferred Units mirroring the stock terms.
Guidance, Outlook, and Risks
Management Commentary: The Company has no obligation to sell any shares under the Sales Agreements. Proceeds from sales are expected to be contributed to the Operating Partnership in exchange for Preferred Units.
Risks and Contingencies:
- The offering is subject to market conditions and the Company's discretion to sell shares.
- The Sales Agreements include indemnification provisions where the Company agrees to indemnify the Agents against certain liabilities under the Securities Act.
- Issuances of Preferred Units to the Operating Partnership are exempt from registration under Section 4(a)(2) of the Securities Act.
Key Facts for Investor Verification
- Verify the actual volume of shares sold and proceeds raised under the $35,000,000 "at the market" facility in subsequent filings.
- Confirm the impact of the 8.20% dividend obligation on the Company's distributable cash flow and earnings per share.
- Review the full text of the Articles Supplementary (Exhibit 3.1) for specific redemption terms and voting restrictions.
- Monitor the Company's liquidity position to ensure it can meet the cumulative dividend requirements of the Series A Preferred Stock.