New Residential Plans $800M Stock Offering to Pay for Citi MSRs


New Residential Investment Corp. is planning a public offering of more than 49.2 million shares of its stock to pay for its purchase of mortgage servicing rights from CitiMortgage.

Based on the company’s stock price as of the open of trading Monday morning, New Residential stands to earn roughly $800 million through the secondary offering. The company will also grant underwriters of the offering the option to purchase up to 7.4 million shares for a period of 30 days.

Proceeds from the offering will fund a portion of the cost of New Residential’s acquisition of conventional mortgage servicing rights from CitiMortgage that have a total unpaid principal balance of $97 billion.

Citigroup Global Markets, Barclays Capital, B of A Merrill Lynch and Credit Suisse Securities will act as the offering’s joint book-running managers, and BTIG and FBR Capital Markets are its co-managers.

Additionally, Nationstar Mortgage Holdings announced Monday that it entered into an agreement with New Residential to subservice the MSRs purchased from CitiMortgage.

“We look forward to welcoming over 750,000 customers to Nationstar, and believe our strategic relationship with New Residential will create meaningful value for these customers and our shareholders,” Jay Bray, chairman and chief executive officer of Nationstar, said in a news release.

Nationstar expects to begin bringing on the MSRs in the beginning of the second quarter of 2017 and to continue the process throughout the year, subject to approval from Fannie Mae, Freddie Mac and regulators.

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