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Business Wire
5 days ago
- Business
- Business Wire
Oversubscribed FINS Rights Offering Enables Angel Oak Capital Team to Deploy Capital into Higher-Coupon Bank Debt Amid Favorable Market Backdrop
ATLANTA--(BUSINESS WIRE)--Angel Oak Financial Strategies Income Term Trust (NYSE: FINS) (the 'Fund') is pleased to share an update on the Fund's capital deployment and general performance following the successful completion of its recent rights offering, which was significantly oversubscribed and raised approximately $110.4 million in gross proceeds. Strong demand drove the oversubscription, with robust participation from existing shareholders, which the Fund believes reflects their confidence in the Fund's management team and investment strategy. For the period ended May 31, 2025, FINS has outperformed its index on a 1-year, 3-year, 5-year and since-inception basis. Additionally, FINS pays out a distribution of over 10% and has narrowed its discount to 5.6% as of May 31, 2025, one of the largest improvements of its peer group over the past year. The Fund's management team continues to deploy fresh capital into higher-coupon bank debt, taking advantage of the marked increase in issuance volumes, as community and regional banks seek to refinance or call debt originated during the post-COVID 2020 vintage. 'The banking sector has several notable tailwinds we are seeking to take advantage of, given strong credit fundamentals across the banking system, with expanding net interest margins, stable credit quality and a growing pipeline of M&A activity,' said Johannes Palsson, Portfolio Manager for the Fund. 'The success of our recent offering validates our conviction in the opportunities we're seeing across the financial sector, and we look forward to deploying capital in the current environment.' 'With decades of experience across our management team and nearly $2 billion invested across private and public strategies in regional and community bank debt, Angel Oak is well positioned to deploy capital and deliver value for our investors,' said Sreeni Prabhu, Managing Partner and Group Chief Investment Officer. 'Our success in managing through multiple cycles and our established presence in the bank-debt sector for more than a decade bode well for the bullish outlook we expect to maintain over the next six to 12 months.' NAV PERFORMANCE AND THE RIGHTS OFFERING Ahead of the rights offering share issuance, FINS' 2025 year-to-date NAV performance benefitted from the resumption of bank debt primary market issuance with meaningful volume, following a slowdown in 2023 and early 2024 due to rising interest rates and the lingering effects of the regional banking crisis. New investment-grade bank debt is coming to market at highly attractive coupons, and pricing has improved on legacy portfolio positions. Notably, a significant portion of the legacy bank-debt portfolio is approaching its call and floating-rate period within the next 12 months, which the Fund believes will position these holdings to pull to par as deals reset to floating rate or are called. Additionally, select tactical equity positions rebounded sharply post-Liberation Day. Tactical opportunities remain a small portion of the Fund, accounting for less than 10% of overall AUM as of May 31, 2025. During the recent rights offering period, NAV was affected by heightened volatility surrounding two specific equity and preferred equity positions: KINS and PNBK. KINS: Angel Oak received warrants with a $1 strike price in conjunction with KINS's 2022 bond issuance. The company reported strong quarterly earnings and is slated for inclusion in the Russell 3000 on June 27, 2025. While the stock initially rallied following earnings, it has since pulled back over the past month. The position remains well in the money and the Fund believes it continues to offer an attractive risk-reward profile. PNBK: Following a recapitalization under new management in March 2025—including new common and convertible preferred equity — PNBK's stock performance ahead of the lockup expiration exceeded expectations by several standard deviations before returning to a more normalized valuation post-expiration. This position also remains well in the money and the Fund believes it is attractive from a risk-reward standpoint. Following the close of the recent rights offering, Angel Oak's investment team rapidly deployed proceeds into money center and regional bank debt to eliminate cash drag. As the issuance calendar accelerates, the team continues to optimize the portfolio by adding higher-coupon community bank bonds. Approximately one-third of the proceeds have already been redeployed, with an average coupon of 7.65% on new community bank-debt investments (range: 7.00%-8.50%), which is over 100 basis points higher than the Fund's average coupon of 6.49% as of March 31, 2025. The team believes the near-term pipeline remains strong, with anticipated new issue coupons ranging from 7.50% to 8.75%. HOLDINGS Click here to access the Fund's holdings as of 4/30/25. Click here to access the Fund's holdings as of 5/31/25. ABOUT FINS Led by Angel Oak's experienced financial services team, FINS invests predominantly in U.S. financial sector debt as well as selective opportunities across financial sector preferred and common equity. Under normal circumstances, at least 50% of FINS' portfolio is publicly rated investment grade or, if unrated, judged to be of investment grade quality by Angel Oak. ABOUT ANGEL OAK CAPITAL ADVISORS, LLC Angel Oak Capital Advisors (the 'Adviser') is an investment management firm focused on providing compelling fixed-income investment solutions to its clients. Backed by a value-driven approach, the Adviser seeks to deliver attractive, risk-adjusted returns through a combination of stable current income and price appreciation. Its experienced investment team seeks the best opportunities in fixed income, with a specialization in mortgage-backed securities and other areas of structured credit. On April 1, 2025, Angel Oak Companies, LP, the parent of Angel Oak Asset Management Holdings, LLC, itself the parent company of the Adviser, announced that it signed a definitive agreement pursuant to which Brookfield Asset Management Ltd. will acquire a majority interest in Angel Oak Companies, LP and its subsidiaries, including the Adviser (the 'Transaction'). The closing of the Transaction is expected to be completed by September 30, 2025. The Transaction is not expected to result in any material change in the day-to-day management of the Fund. However, the closing of the Transaction is subject to certain conditions, and there can be no assurance that the Transaction will be completed as planned, or that the necessary conditions will be satisfied. If successful, the closing of the Transaction would be deemed to be a change of 'control' of Angel Oak Companies, LP and its subsidiaries (collectively, 'Angel Oak'), including the Adviser, under the Investment Company Act of 1940, and deemed 'assignment' of the Fund's investment advisory agreement (the 'Existing Advisory Agreement'), which would result in the automatic termination of the Fund's Existing Advisory Agreement. However, following the closing of the Transaction, the existing management team of Angel Oak will continue to independently manage the day-to-day business of Angel Oak and the Adviser, and will control the board of directors of Angel Oak. At a meeting held on April 23, 2025, the Board of the Fund approved a new investment advisory agreement between Angel Oak and the Fund (the 'New Advisory Agreement'), subject to shareholder approval at a shareholder meeting to be held on June 26, 2025. This communication is not a proxy and is not soliciting any proxy in connection therewith, which can only be done by means of a proxy statement. Information regarding the Fund and the Adviser can be found at Past performance is neither indicative nor a guarantee of future results. Investors should read the prospectus supplement and accompanying prospectus and consider the investment objective and policies, risk considerations, charges and ongoing expenses of an investment carefully before investing. For more information, please contact your investment representative or EQ Fund Solutions at 866-751-6314.
Business Wire
05-05-2025
- Business
- Business Wire
Angel Oak Mortgage REIT, Inc. Reports First Quarter 2025 Financial Results
ATLANTA--(BUSINESS WIRE)-- Angel Oak Mortgage REIT, Inc. (NYSE: AOMR) (the 'Company,' 'we,' and 'our'), a leading real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market, today reported financial results for the quarter ended March 31, 2025. First Quarter 2025 Highlights Q1 2025 GAAP net income of $20.5 million, or $0.87 per diluted share of common stock. Q1 2025 net interest income of $10.1 million demonstrates an increase of 17.6% versus Q1 2024 net interest income of $8.6 million and an increase of 2.3% versus Q4 2024 net interest income. Q1 2025 GAAP book value of $10.70 per share and economic book value of $13.41 per share, increases of 5.2% and 2.4%, respectively, compared to the end of 2024. Q1 2025 Distributable Earnings of $4.1 million, or $0.17 per diluted share of common stock. Declared a dividend of $0.32 per share of common stock, which will be paid on May 30, 2025, to common stockholders of record as of May 22, 2025. Sreeni Prabhu, Chief Executive Officer and President of Angel Oak Mortgage REIT, Inc., said "We are proud to have achieved continued net interest income expansion in the first quarter of this year, marking approximately 18% growth compared to the first quarter of 2024 and over 2% growth compared to the fourth quarter of 2024. Our earnings growth was buoyed by the acquisition of nearly $260 million of high-quality non-QM loan purchases throughout the first quarter along with continued maintenance of our operating expense savings. Despite recent volatility caused by broad uncertainty around tariffs, we look to continue expanding earnings through additional loan purchases with the capital made available by our post-quarter end securitization. And, as always, we will remain committed to growing long-term shareholder value through disciplined risk management, securitization execution, and strategic capital deployment.' Portfolio and Investment Activity Following quarter end, in April 2025, the Company executed the AOMT 2025-4 securitization as the sole contributor of loans. The Company contributed loans with a scheduled unpaid principal balance of approximately $284.3 million and a 7.50% weighted average coupon. This securitization reduced the Company's debt by approximately $242.4 million and released cash of $24.7 million to the Company, which was used for new loan purchases and operational purposes, including paying down a portion of repurchase debt obligation on our retained bond positions, and general corporate purposes. During the quarter, the Company purchased $259.0 million of newly-originated, current market coupon non-QM residential mortgage loans, with a weighted average coupon of 7.67%, weighted average loan-to-value ratio ('LTV') of 70.0% and weighted average credit score of 751. As of March 31, 2025, the weighted average coupon of our residential whole loans portfolio was 7.55%, marking a 44 basis point increase compared to March 31, 2024. Capital Markets Activity As of March 31, 2025, the Company was a party to three loan financing lines which permit borrowings in an aggregate amount of up to $1.1 billion, of which approximately $360 million is drawn, leaving capacity of approximately $690 million for new loan purchases. Balance Sheet Target assets totaled $2.5 billion as of March 31, 2025. The Company held residential mortgage whole loans with fair value of $439.5 million as of March 31, 2025. As of March 31, 2025, the Company's recourse debt to equity ratio was approximately 2.3x. Subsequent to quarter end, the Company used the proceeds of the AOMT 2025-4 securitization to pay down $242.4 million of debt and replaced it with non-recourse leverage, reducing the Company's recourse debt to equity ratio to approximately 1.3x. Dividend On May 5, 2025, the Company declared a dividend of $0.32 per share of common stock, which will be paid on May 30, 2025, to common stockholders of record as of May 22, 2025. Conference Call and Webcast Information The Company will host a live conference call and webcast today, May 5, 2025 at 8:30 a.m. Eastern time. To listen to the live webcast, go to the Investors section of the Company's website at at least 15 minutes prior to the scheduled start time in order to register and install any necessary audio software. To Participate in the Telephone Conference Call: Dial in at least 15 minutes prior to start time. Domestic: 1-844-826-3033 International: 1-412-317-5185 Conference Call Playback: Domestic: 1-844-512-2921 International: 1-412-317-6671 Pass code: 10198623 The playback can be accessed through May 19, 2025. Non-GAAP Metrics Distributable Earnings is a non‑GAAP measure and is defined as net income (loss) allocable to common stockholders as calculated in accordance with generally accepted accounting principles in the United States of America ('GAAP'), excluding (1) unrealized gains and losses on our aggregate portfolio, (2) impairment losses, (3) extinguishment of debt, (4) non-cash equity compensation expense, (5) the incentive fee earned by Falcons I, LLC, our external manager (our 'Manager'), (6) realized gains or losses on swap terminations and (7) certain other nonrecurring gains or losses. We believe that the presentation of Distributable Earnings provides investors with a useful measure to facilitate comparisons of financial performance among our real estate investment trust ('REIT') peers, but has important limitations. We believe Distributable Earnings as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings may not be comparable to similar measures presented by other REITs. Distributable Earnings Return on Average Equity is a non-GAAP measure and is defined as annual or annualized Distributable Earnings divided by average total stockholders' equity. We believe that the presentation of Distributable Earnings Return on Average Equity provides investors with a useful measure to facilitate comparisons of financial performance among our REIT peers, but has important limitations. Additionally, we believe Distributable Earnings Return on Average Equity provides investors with additional detail on the Distributable Earnings generated by our invested equity capital. We believe Distributable Earnings Return on Average Equity as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings Return on Average Equity should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings Return on Average Equity may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings Return on Average Equity may not be comparable to similar measures presented by other REITs. Economic book value is a non-GAAP financial measure of our financial position. To calculate our economic book value, the portions of our non-recourse financing obligation held at amortized cost are adjusted to fair value. These adjustments are also reflected in our end of period total stockholders' equity. Management considers economic book value to provide investors with a useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for our legally held retained bonds, irrespective of the accounting model applied for GAAP reporting purposes. Economic book value does not represent and should not be considered as a substitute for book value per share of common stock or stockholders' equity, as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies. Forward-Looking Statements This press release contains certain forward-looking statements that are subject to various risks and uncertainties, including, without limitation, statements relating to the performance of the Company's investments. Forward-looking statements are generally identifiable by use of forward-looking terminology such as 'may,' 'will,' 'should,' 'potential,' 'intend,' 'expect,' 'endeavor,' 'seek,' 'anticipate,' 'estimate,' 'believe,' 'could,' 'project,' 'predict,' 'continue,' or by the negative of these words and phrases or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe existing or future plans and strategies, contain projections of results of operations, liquidity and/or financial condition, or state other forward-looking information. The Company's ability to predict future events or conditions or their impact or the actual effect of existing or future plans or strategies is inherently uncertain. Although the Company believes that such forward-looking statements are based on reasonable assumptions, actual results and performance in the future could differ materially from those set forth in or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward‐looking statements, which reflect the Company's views only as of the date of this press release. Additional information concerning factors that could cause actual results and performance to differ materially from these forward-looking statements is contained from time to time in the Company's filings with the Securities and Exchange Commission. Except as required by applicable law, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward‐looking statements. The Company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise. About Angel Oak Mortgage REIT, Inc. Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market. The Company's objective is to generate attractive risk-adjusted returns for its stockholders through cash distributions and capital appreciation across interest rate and credit cycles. The Company is externally managed and advised by an affiliate of Angel Oak Capital Advisors, LLC, which, collectively with its affiliates, is a leading alternative credit manager with market leadership in mortgage credit that includes asset management, lending, and capital markets. Additional information about the Company is available at Angel Oak Mortgage REIT, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except for share and per share data) As of: December 31, 2024 ASSETS Residential mortgage loans - at fair value $ 439,460 $ 183,064 Residential mortgage loans in securitization trusts - at fair value 1,672,189 1,696,995 RMBS - at fair value 398,272 300,243 U.S. Treasury securities - at fair value 74,959 — Cash and cash equivalents 38,696 40,762 Restricted cash 4,774 2,131 Principal and interest receivable 9,823 8,141 TBA derivatives and interest rate futures derivatives - at fair value 1,421 1,515 Other assets 36,941 36,918 Total assets $ 2,676,535 $ 2,269,769 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Notes payable $ 360,470 $ 129,459 Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts (see Note 2) 1,556,075 1,593,612 Securities sold under agreements to repurchase 148,467 50,555 Interest rate futures derivatives - at fair value 947 — Due to broker 302,619 201,994 Senior unsecured notes 47,865 47,740 Accrued expenses 2,539 2,291 Accrued expenses payable to affiliate 248 766 Interest payable 1,865 934 Income taxes payable 2,785 2,785 Management fee payable to affiliate 1,175 666 Total liabilities $ 2,425,055 $ 2,030,802 STOCKHOLDERS' EQUITY Common stock, $0.01 par value. As of March 31, 2025: 350,000,000 shares authorized, 23,500,175 shares issued and outstanding. As of December 31, 2024: 350,000,000 shares authorized, 23,500,175 shares issued and outstanding. $ 234 $ 234 Additional paid-in capital 461,294 461,057 Accumulated other comprehensive income (loss) (4,170 ) (3,475 ) Retained earnings (deficit) (205,878 ) (218,849 ) Total stockholders' equity $ 251,480 $ 238,967 Total liabilities and stockholders' equity $ 2,676,535 $ 2,269,769 Expand Angel Oak Mortgage REIT, Inc. Reconciliation of Net Income (Loss) to Distributable Earnings and Distributable Earnings Return on Average Equity (Unaudited) Three Months Ended March 31, 2025 March 31, 2024 (in thousands) Net income (loss) allocable to common stockholders $ 20,531 $ 12,874 Adjustments: Net unrealized (gains) losses on trading securities 1,032 1 Net unrealized (gains) losses on derivatives 1,042 (445 ) Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation (15,657 ) (5,147 ) Net unrealized (gains) losses on residential loans (3,041 ) (5,071 ) Net unrealized (gains) losses on commercial loans — (22 ) Stock compensation 237 630 Distributable Earnings $ 4,144 $ 2,820 Expand Three Months Ended March 31, 2025 March 31, 2024 ($ in thousands) Annualized Distributable Earnings $ 16,576 $ 11,280 Average total stockholders' equity 252,033 259,715 Distributable Earnings Return on Average Equity 6.6 % 4.3 % Expand
Globe and Mail
01-04-2025
- Business
- Globe and Mail
Brookfield Asset Management and Angel Oak to Enter into Strategic Partnership
NEW YORK, April 01, 2025 (GLOBE NEWSWIRE) -- Brookfield Asset Management (NYSE: BAM, TSX: BAM) ('Brookfield') and Angel Oak Companies ('Angel Oak'), a leading asset manager delivering innovative mortgage and consumer products, today announced that they have entered into an agreement in which Brookfield will acquire a majority ownership stake in Angel Oak and offer its investors access to the firm's residential mortgage credit strategies. Angel Oak joins Brookfield as part of the firm's $317 billion credit business, aligning with Brookfield's broader strategy to partner with best-in-class credit managers alongside its direct investment platform. Craig Noble, CEO of Brookfield Credit said, 'We are pleased to announce our partnership with Angel Oak. Their origination and investment capabilities will be a strong complement to Brookfield's overall credit offering as we grow our platform. We believe Brookfield can add significant value as Angel Oak looks to build upon its success by both broadening and deepening its relationships with institutional investors.' Since its founding in 2008, Angel Oak has grown into a premier alternative asset manager with over $18 billion in assets under management, serving both institutional and individual investors. The firm provides differentiated access to U.S. non-agency residential mortgages through a vertically integrated platform that combines its leading non-bank wholesale mortgage originator, Angel Oak Mortgage Solutions, with its asset management business, Angel Oak Capital Advisors. This integrated model, supported by deep market expertise, has resulted in a strong track record of delivering high-quality credit investments. Over the past decade, Angel Oak has originated more than $30 billion in residential mortgage loans and issued over 60 securitizations—a pace expected to accelerate given the growth in borrower segments that are underserved by traditional lenders. In discussing the partnership, Sreeni Prabhu and Mike Fierman, co-founders and Co-CEOs of Angel Oak, stated, 'We are thrilled to partner with Brookfield, whose disciplined investment approach, proven track record of achieving robust long-term growth, and global presence aligns perfectly with our vision. We are particularly impressed with the entrepreneurial spirit that has remained intact at Brookfield as they have become one of the largest alternative asset managers globally. This partnership validates Angel Oak's proven model and past success, while opening new avenues for growth and innovation in providing clients access to residential mortgage credit. With Brookfield as our partner, we see significant opportunities to scale our integrated asset management and mortgage operations to better serve our clients'. Angel Oak will continue to operate its business independently, retaining its current leadership, including Prabhu and Fierman as Co-CEOs. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as Brookfield's legal counsel. KingsRock Securities LLC, a wholly owned subsidiary of KingsRock Advisors LLC, acted as exclusive financial advisor to Angel Oak, and UBS Investment Bank advised the management team of Angel Oak on this transaction. Paul Hastings LLP acted as legal counsel to Angel Oak. About Brookfield Asset Management Brookfield Asset Management Ltd. (NYSE: BAM, TSX: BAM) is a leading global alternative asset manager, headquartered in New York, with over $1 trillion of assets under management across renewable power and transition, infrastructure, private equity, real estate, and credit. We invest client capital for the long-term with a focus on real assets and essential service businesses that form the backbone of the global economy. We offer a range of alternative investment products to investors around the world — including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. We draw on Brookfield's heritage as an owner and operator to invest for value and generate strong returns for our clients, across economic cycles. Brookfield Credit manages approximately $317 billion of assets globally, focused on a broad range of private credit investment strategies, including infrastructure, renewables, real estate, asset backed, and corporate credit. Return profiles span investment grade, sub-investment grade, and opportunistic. The business combines Brookfield's substantial direct investment platform which has been developed over several decades, with strategic partners, including Oaktree Capital Management, Castlelake, LCM Partners, 17Capital, and Primary Wave Music. As one of the world's largest and most experienced credit managers globally, Brookfield Credit delivers flexible, specialized capital solutions to borrowers, and seeks to achieve attractive risk-adjusted returns for our clients. For more information, please visit our website at About Angel Oak Capital Advisors LLC Angel Oak Capital Advisors specializes in mortgage credit, structured credit and financials credit, managing approximately $18 billion in assets. Backed by a value-driven approach, Angel Oak seeks to deliver attractive, risk-adjusted returns through a combination of stable current income and price appreciation. About Angel Oak Mortgage Solutions LLC Angel Oak Mortgage Solutions LLC (NMLS ID #1160240), a leader in alternative lending solutions, is the top nonbank wholesale and correspondent lender of non-QM loans in the nation. Its team of mortgage experts has pioneered a commonsense approach to overcoming today's mortgage lending challenges. The team, which operates in 46 states and the District of Columbia, offers a breadth of non-QM products that expand the pool of borrowers, giving partners more opportunities to grow their businesses and better serve their customers.
Bloomberg
01-04-2025
- Business
- Bloomberg
Brookfield Buys Majority Stake in Mortgage Specialist Angel Oak
Brookfield Asset Management Ltd. has agreed to buy a majority stake in Angel Oak Companies, a mortgage lender and investor that manages over $18 billion, as the New York-based firm continues efforts to grow its private credit business. The asset manager will take a 50.1% stake in Angel Oak, offering its own investors access to the firm's residential mortgage credit business, according to an emailed statement. Angel Oak will still operate independently, with co-founders Sreeni Prabhu and Mike Fierman staying on as co-chief executive officers.
