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Trinity taps into niche real estate lending space via Broadmark
Posted on Tuesday, 13 August 2019 12:22
Trinity Merger is acquiring Broadmark real estate lending and management group of companies for USD 1.16 billion to establish a new, publicly-traded Maryland corporation known as Broadmark Realty Capital. Under terms of the agreement, the blank check will pay USD 1.10 billion in stock and USD 98.00 million in cash. In addition, Farallon Capital Management has entered into a private placement subscription agreement to buy USD 75.0 million-worth of newly issued shares in the resulting Broadmark Realty entity. Proceeds from the private investment in the public entity – at an estimated reference price of USD 10.47 apiece - will be used to fund transaction-related expenses. Money raised will also finance ongoing business operations following the consummation of the combination, including funding new loan origination opportunities in existing and new markets. Founded in 2010 and headquartered in Seattle, Broadmark itself is a leading provider of financing to real estate investors and developers across the US. The company originates short term, first deed of trust mortgages with conservative loan-to-value collateral support. As of 31st March 2019, it had about USD 992.20 million in total committed loans in target geographic regions that exhibit favourable demographic trends. To date, Broadmark has delivered monthly unlevered distributions representing annual returns of 10.0 per cent to 11.0 per cent based on invested capital in its lending companies. Broadmark Realty will be a scalable listed platform with a market capitalisation of USD 1.50 billion, no debt and the aim of reaching an initial annual dividend of USD 1.25 to USD 1.30 per share. The USD 1.50 billion internally managed unlevered mortgage real estate investment trust will focus on capitalising on significant demand for construction financing, a niche area previously provided by commercial banks. © Zephus Ltd