Reverse Mortgage Investment Trust, the REIT behind Reverse Mortgage Funding (RMF), has filed with the Securities and Exchange Commission to raise up to $100 million in an initial public offering.
The Bloomfield, New Jersey-based company, which was founded in 2013, plans to list on the NYSE under the symbol RMIT.
“We believe we are one of the most well capitalized companies focused on the reverse mortgage industry,” the REIT writes in its SEC filing. “During 2014, we experienced rapid growth. We achieved an approximate 12% HECM loan origination market share during the month of September 2014 (measured by Agency HMBS issuance) and managed approximately $785 million of reverse mortgage assets as of September 30, 2014.”
Prior to this offering, there has been no public market for RMIT’s shares of common stock. The initial public offering price for its shares of common stock will be determined by negotiations between underwriters and the REIT. No pricing terms were disclosed.
“Our principal objective is to provide attractive risk-adjusted returns to our stockholders over the long term through distributions and capital appreciation,” RMIT says.
In its filing, the company cites an “unprecedented” market opportunity for reverse mortgages. Although the financial product has had low market penetration — estimates show only about 2.16% of eligible households had a reverse mortgage as of February 2014 — population demographics will push the product to the forefront of financial planning, RMIT says.
“We believe that reverse mortgage loans will become an increasingly important financial planning tool for baby boomers and other elderly Americans in their retirement years. In addition, market factors including favorable aging demographics, potential home price appreciation, ongoing effects of the recent mortgage crisis, large lender exits from the reverse mortgage market, increased liquidity needs and recent changes to the FHA HECM loan program have created an attractive investment opportunity in the industry. We believe that all of these factors have created an exceptional opportunity for us to implement our business plan,” RMIT says.
Today, a limited number of regional and national banks offer reverse mortgage loans. As of September 30, there were approximately 12,700 local community banks and credit unions nationally, but less than 2% of these banks and credit unions originated a HECM loan during the first nine months of the year.
However, over the next few years, the REIT expects that increased consumer demand will spur more traditional regional and local banking institutions and credit unions to make reverse mortgage products available to their customers.
“With a significant percentage of community banks and credit unions’ depositors being older Americans, we believe that there is an unprecedented opportunity to provide a comprehensive suite of services to these banking institutions where we provide back office services, including processing, underwriting, loan purchasing, servicing and other customized ‘white label’ services based on the individual banking institution’s needs,” RMIT says.
The REIT declined to comment further on its initial public offering.
Earlier this year, RMIT submitted a registration statement with the SEC in connection with its proposed initial public offering of its common stock, including the REIT’s expected acquisition of RMF. A few months later, RMIT acquired RMF and completed a private equity offering, raising $230 million in capital.
Written by Emily Study