Terra Property Trust tops Angelo Gordon-backed REIT's bid for Western Asset Mortgage -letter

Western Asset Mortgage Capital

03/08/2023 12:00

By Svea Herbst-Bayliss
       NEW YORK, Aug 3 (Reuters) - Terra Property Trust
 TPTA.N  has submitted a revised stock-and-cash offer to lock in
its planned merger with Western Asset Mortgage Capital  WMC.N ,
a real estate investment trust managed by Franklin Templeton
 BEN.N , showed a letter seen by Reuters.
    Vik Uppal, chairman and CEO of Mavik Capital which manages
real estate investment trust Terra Property Trust (TPT), wrote
to Western Asset Mortgage Capital (WMC) that the revised offer
provides stockholders with approximately $16 per share in value
compared with a rival bidder's roughly $10.60 per share in total
consideration.
    WMC invests in residential whole loans and mortgage-backed
securities, similar to TPT. In late June, the two REITs
announced an all-stock merger that had a book value of $436
million based on $1.2 billion in assets.
    Last month, Angelo Gordon-backed AG Mortgage Investment
Trust  MITT.N  made an unsolicited stock-and-cash bid for WMC,
seeking to disrupt TPT's initial all-stock offer.
    TPT has now added a nearly $9 million cash component that is
roughly 22% more than the cash offered by AG Mortgage.
    "A merger between TPT and WMC is the best path to maximizing
value for WMC stockholders because it provides for, among other
things, enhanced scale, a more diversified portfolio, and a
stronger balance sheet," Uppal wrote.
    TPT also pledged to reduce its management fee 25 basis
points below AG Mortgage's 1.5% level to provide stockholders
estimated annual savings of more than $1 million. 
    TPT took aim at AG Mortgage's management fees, writing the
REIT has been "charging stockholders high fees" to pay for poor
results. Over the past five years, AG Mortgage's share price is
down more than 85%.
    WMC and AG Mortgage did not immediately reply to requests
for comment.
    Management fees in the REIT industry, which can run at 1% to
2% of assets, have been a growing sore spot for investors.
Jonathan Litt's Land & Buildings Investment Management and Jason
Aintabi's Blackwells Capital are among a growing group of
investment firms who have criticized managers for high fees
amidst deals.

 (Reporting by Svea Herbst-Bayliss; Editing by Christopher
Cushing)
 ((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))