Terra Property Trust tops Angelo Gordon-backed REIT's bid for Western Asset Mortgage -letter
By Svea Herbst-Bayliss
NEW YORK, Aug 3 (Reuters) - Terra Property Trust has submitted a revised stock-and-cash offer to lock in its planned merger with Western Asset Mortgage Capital, a real estate investment trust managed by Franklin Templeton , 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 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)
