Company Overview
| Company Name |
TWO HARBORS INVESTMENT CORP. |
| Company Address |
601 CARLSON PARKWAY
SUITE 1400
MINNETONKA, MN 55305 |
| Company Phone |
612-629-2500 |
| Company Website |
www.twoharborsinvestment.com |
| CEO |
Thomas Siering |
| Employees (as of 2/28/2012) |
0 |
| State of Inc |
-- |
| Fiscal Year End |
12/31 |
| Status |
Priced (7/12/2012) |
| Symbol |
TWO |
| Exchange |
New York Stock Exchange |
| Share Price |
$10.83 |
| Shares Offered |
35,000,000 |
| Offer Amount |
$379,050,000.00 |
| Total Expenses |
$417,000.00 |
| Shares Over Alloted |
0 |
| Shareholder Shares Offered |
-- |
| Shares Outstanding |
256,843,851 |
| Lockup Period (days) |
180 |
| Lockup Expiration |
1/8/2013 |
| Quiet Period Expiration |
8/21/2012 |
| CIK |
0001465740 |
We expect to receive net proceeds from the sale of common stock totaling
approximately $ , after deducting underwriting discounts and estimated
offering expenses. If the underwriters’ over-allotment option is exercised in
full, our net proceeds from the offering will be approximately $ ,
after deducting underwriting discounts and estimated offering expenses.
We plan to use the net proceeds from this offering to purchase our target
assets, which include Agency RMBS, non-Agency RMBS, residential mortgage
loans, residential real property and other financial assets, in each case
subject to our investment guidelines and to the extent consistent with
maintaining our REIT qualification, and for general corporate purposes.
PRCM Advisers LLC will make determinations as to the percentage of our
equity that will be invested in each of our target assets and the timing
of deployment of the net proceeds of this offering. These determinations
will depend on prevailing market conditions and may change over time in
response to opportunities available in different interest rate, economic
and credit environments. Until appropriate assets can be identified, PRCM
Advisers LLC may decide to use the net proceeds to pay off our short-term
debt or invest the net proceeds in interest-bearing short-term investments,
including funds which are consistent with our REIT election. These investments
are expected to provide a lower net return than we seek to achieve from our
target assets. Prior to the time we have fully used the net proceeds of this
offering to acquire our target assets, we may fund our quarterly dividends
out of such net proceeds.
Our net income will depend, in large part, on our ability to acquire assets at
favorable spreads over our borrowing costs. In acquiring our target assets,
we will compete with other REITs, specialty finance companies, savings and
loan associations, banks, mortgage bankers, insurance companies, mutual funds,
institutional investors, investment banking firms, financial institutions,
governmental bodies and other entities. Some of these entities may not be
subject to the same regulatory constraints that we are (i.e., REIT compliance
or maintaining an exemption under the 1940 Act). In addition, there are
numerous REITs with similar asset acquisition objectives, including a number
that have been recently formed, and others may be organized in the future.
These other REITs will increase competition for the available supply of RMBS,
residential mortgage loans and residential real properties. Many of our
competitors are significantly larger than us, have access to greater capital
and other resources and may have other advantages over us. In addition, some
of our competitors may have higher risk tolerances or different risk
assessments, which could allow them to consider a wider variety of
investments and establish more relationships than us. Current market
conditions may attract more competitors, which may increase the competition
for sources of financing. An increase in the competition for sources of
funding could adversely affect the availability and cost of financing, and
thereby adversely affect the market price of our common stock.
Company Description
Two Harbors Investment Corp. is a Maryland corporation focused on investing
in, financing and managing residential mortgage-backed securities, or RMBS,
residential mortgage loans, residential real properties and other financial
assets, which we collectively refer to as our target assets. We
operate as a
real estate investment trust, or REIT, as defined under the Internal Revenue
Code of 1986, as amended, or the Code.
We are externally managed and advised by PRCM Advisers LLC, a wholly-owned
subsidiary of Pine River Capital Management L.P., or Pine River. Founded in
2002, with offices in New York, London, Hong Kong, San Francisco, Beijing and
Minnetonka, Minnesota, Pine River is a global multi-strategy asset management
firm providing comprehensive portfolio management, transparency and liquidity
to institutional and high net worth investors.
Our objective is to provide attractive risk-adjusted returns to our
stockholders over the long term, primarily through dividends and secondarily
through capital appreciation. We selectively acquire and manage an investment
portfolio of our target assets, which is constructed to generate attractive
returns through market cycles. We focus on security selection and implement
a relative value investment approach across various sectors within the
residential mortgage market. Our target assets include the following:
• Agency RMBS, meaning RMBS whose principal and interest payments are
guaranteed by the Government National Mortgage Association (or Ginnie Mae),
the Federal National Mortgage Association (or Fannie Mae), or the Federal
Home Loan Mortgage Corporation (or Freddie Mac);
• Non-Agency RMBS, meaning RMBS that are not issued or guaranteed by Ginnie
Mae, Fannie Mae or Freddie Mac;
• Residential mortgage loans;
• Residential real properties; and
• Other financial assets comprising approximately 5% to 10% of the portfolio.
We seek to deploy moderate leverage as part of our investment strategy. We
generally finance our RMBS and mortgage loan assets through short-term
borrowings structured as repurchase agreements.
We recognize that investing in our target assets is competitive and that we
compete with other investment vehicles for attractive investment
opportunities. We rely on our management team and Pine River, who have
developed strong relationships with a diverse group of financial
intermediaries. In addition, we have benefited and expect to continue to
benefit from Pine River’s analytical and portfolio management expertise and
infrastructure. We believe that our significant focus on the RMBS area, the
extensive RMBS expertise of our investment team, our strong analytics and
our disciplined relative value investment approach give us a competitive
advantage versus our peers.
We have elected to be taxed as a REIT for U.S. federal income tax purposes.
To qualify as a REIT we are required to meet certain investment and operating
tests and annual distribution requirements. We generally will not be subject
to U.S. federal income taxes on our taxable income to the extent that we
annually distribute all of our net taxable income to stockholders, do not
participate in prohibited transactions and maintain our qualification as a
REIT. However, certain activities that we may perform may cause us to earn
income which will not be qualifying income for REIT purposes. We have
designated one or more of our subsidiaries as taxable REIT subsidiaries, or
TRS, as defined in the Code, to engage in such activities, and we may in the
future form additional TRSs. We also intend to operate our business in a
manner that will permit us to maintain our exemption from registration under
the Investment Company Act of 1940, as amended, or the 1940 Act.
Our headquarters are located at 601 Carlson Parkway, Suite 150, Minnetonka,
Minnesota 55305 and our telephone number is (612) 629-2500. We maintain a
website at www.twoharborsinvestment.com.