Based in Red Bank, NJ, ZAIS Financial (NYSE:ZFC) scheduled a $121 million IPO with a market capitalization of $170 million at a price of $21.25, for Friday, February 8, 2013.
Eight IPOs are scheduled for the week of February 4. The full IPO calendar is available here.
S-11 filed January 30, 2013
Manager, Joint Managers: Deutsche Bank Securities/ Citigroup/ Barclays/ Credit Suisse.
Co Managers: Stifel Nicolaus Weisel/ Oppenheimer/ Ladenburg Thalmann.
ZFC is another mortgage REIT.
ZFC is priced at .9 times book. Other mortgage REITS that have IPO'd have come at 1.0 times book, and have all sold down the first day, then the earlier ones traded up.
Because ZFC is priced at less than book value, it has a chance of trading up a bit after the IPO over time.
ZFC is a Maryland corporation that invests in, finances and manages a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets.
ZFC currently primarily invests in, finances and manages non-Agency RMBS and Agency RMBS.
The RMBS strategy focuses on non-Agency RMBS with an emphasis on securities that, when originally issued, were rated in the highest rating category by one or more of the nationally recognized statistical rating organizations, as well as Agency RMBS.
ZFC's strategy will also emphasize the purchase of performing and re-performing residential whole loans. ZFC will also have the discretion to invest in other real estate-related and financial assets, MSRs, IOs, CMBS and ABS.
ZFC's income is generated primarily by the net spread between the income earned on assets and the cost of financing and hedging activities.
ZFC is externally managed and advised by ZAIS REIT Management, LLC, a subsidiary of ZAIS Group, LLC, a privately-held, investment advisor registered with the U.S. Securities and Exchange Commission with $5.5 billion of assets under management as of September 30, 2012.
ZFC completed the formation transaction and commenced operations on July 29, 2011. The formation transaction involved the exchange by investors in two funds from the Matrix VI Funds of cash and RMBS assets for an aggregate of 3,022,617 shares of common stock.
ZFC received $60.5 million in this transaction, including $8.65 million from the ZAIS Parties and deployed the cash together with additional borrowings to build a diversified portfolio of RMBS assets.
As part of the initial formation transactions, ZFC anticipated completing a initial public offering on or prior to August 3, 2012 and viewed the initial public offering as a means for stockholders to achieve liquidity in their investments.
PROPOSED OFFERING DELAYED - SOME STOCKHOLDERS SELL
ZFC delayed the initial public offering beyond August 3, 2012. In connection with the delay of the initial public offering, ZFC offered to repurchase shares from stockholders who desired to achieve liquidity around the time of the original August 3, 2012 time frame.
Accordingly, on October 11, 2012, ZFC repurchased 668,525 shares of common stock from existing stockholders at the per share book value as of July 31, 2012.
On January 24, 2013, ZFC also repurchased 265,245 shares of common stock from one of its institutional stockholders. ZFC paid to the stockholder $5.2 million, which represented 90% of the repurchase amount based on the estimated book value per share as of December 31, 2012, the remaining 10% of the repurchase price will be paid following the completion of ZFC's December 31, 2012 year-end audit.
In October of 2012, ZVC also completed a private placement in which it sold 195,457 shares of common stock and 22,492 Operating Partnership units (or OP units) at a price per share equal to the per share book value as of August 31, 2012. Subsequently, in December of 2012, ZFC completed another private placement in which we sold 36,581 shares of common stock and 904,422 OP units at a price per share equal to the per share book value as of November 30, 2012.
ZFC's current policy is to pay quarterly distributions which, on an annual basis, will equal all or substantially all of its net taxable income
Recent mortgage REIT IPOs and their IPO date include:
JAVELIN Mortgage Investment (NYSE:JMI), Oct 2, 2012
Western Asset Mortgage (NYSE:WMC) May 10, 2012.
American Cap Mortage (NASDAQ:MTGE), Aug 5, 2011
AG Mortgage Investment Trust (NYSE:MITT), June 29, 2011.
USE OF PROCEEDS
ZFC expects to net $119 million from its IPO.
ZFC plans to use the net proceeds from the IPO, together with additional borrowings, to purchase target assets such that, over time, ZFC's equity will be allocated 50% to 60% to whole loans, 30% to 40% to non-agency RMBS, 5% to 10% to MSRs, other real-estate related and financial assets and cash, and 0% to 5% to agency RMBS.
Disclaimer: This IPO report is based on a reading and analysis of ZFC's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.