Angelo Gordon-backed REIT in $300 million bid for Western Asset Mortgage (updated)

Western Asset Mortgage Capital

13/07/2023 23:15

(Adds statement from TPT in paragraph 6)
    By Anirban Sen
       NEW YORK, July 13 (Reuters) - AG Mortgage Investment
Trust Inc  MITT.N , a real estate investment trust (REIT)
managed by Angelo Gordon & Co, said on Thursday it made a
stock-and-cash offer for Western Asset Mortgage Capital Corp
 WMC.N , a peer managed by Franklin Resources Inc  BEN.N , that
values it at about $300 million, including debt. 
    If successful, AG Mortgage's bid would disrupt an all-stock
deal that Western Asset Mortgage unveiled on June 28 to merge
with Terra Property Trust Inc  TPTA.N  (TPT), a REIT managed by
Mavik Capital Management LP. 
    The deal with TPT valued Western Asset Mortgage at the time
at $17.30 per share. Western Asset Mortgage shares have traded
significantly lower since, closing on Wednesday at $8.35. This
is because investors have been skeptical about the value of
TPT's shares, which do not trade on a major stock exchange. 
    AG Mortgage's offer is equivalent to $9.88 per share, an
18.2% premium, according to a letter AG Mortgage sent to Western
Asset Mortgage on Thursday that was seen by Reuters and which AG
Mortgage later made public. The consideration consists of $8.90
per share payable in AG Mortgage shares and $0.98 per share
payable in cash. 
    "(Our) stock trades on the NYSE with an observable value,
while TPT's shares are not listed and have never been valued by
public markets through a stock exchange listing," AG Mortgage
CEO T.J. Durkin wrote in the letter.
    Western Asset Mortgage did not immediately reply to a
request for comment on the offer. In a statement, TPT said it
remained committed to the deal and argued that its proposed
merger "represents the most compelling transaction for
stockholders" of Western Asset Mortgage. 
    AG Mortgage also offered to waive about $2.4 million of
management fees after the deal closes, and proposed to expand
its board to include two of Western Asset Mortgage's independent
directors. AG Mortgage added that its proposed deal is not
subject to any financing condition.
    Western Asset Mortgage invests in residential whole loans
and mortgage-backed securities, as does AG Mortgage. Angelo
Gordon, a credit and real estate-focused investment firm which
currently manages about $73 billion in assets, agreed in May to
sell itself to private equity firm TPG Inc  TPG.O  for $2.7
billion.  

 (Reporting by Anirban Sen in New York
Editing by Stephen Coates and Matthew Lewis)
 ((Anirban.Sen@thomsonreuters.com; Twitter: @asenjourno; Reuters
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