Deutsche Bank announced the signing of a definitive agreement to acquire MortgageIT Holdings, Inc., a residential mortgage real estate investment trust (REIT), for $14.75 in cash per share of common stock, or an estimated $429 million (€338 million) in the aggregate. The transaction is expected to close in the fourth quarter of 2006, subject to various closing conditions including MortgageIT Holdings' shareholders' approval and customary regulatory approvals.
This acquisition is expected to be earnings accretive in 2007 and will add significant platform scale and synergies to Deutsche Bank's existing US residential mortgage franchise. It is a key element of the Bank's build-out of a vertically integrated mortgage origination and securitization platform.
MortgageIT Holdings owns MortgageIT, Inc., a residential mortgage lender that employs approximately 2,100 people in 50 branches, and is licensed to originate residential mortgage loans in all 50 states. In 2005, MortgageIT grew its loan originations approximately 124% over 2004, to $29.2 billion, and is one of the fastest-growing and largest residential mortgage loan originators in the US.
Upon closing, the operating company, MortgageIT, Inc., will become a part of Deutsche Bank's Residential Mortgage Backed Securities (RMBS) business, which is based in New York. Deutsche Bank's acquisition of MortgageIT is the latest in a series of steps taken to significantly increase its presence in the US mortgage markets. The Bank has built a correspondent lending business which is on track to purchase approximately $10 billion in residential mortgage loans this year. In May, Deutsche Bank entered into a definitive agreement to purchase Chapel Funding LLC, a sub-prime wholesale mortgage originator which is expected to originate approximately $2 billion in mortgages in 2006.
"As Deutsche Bank continues to grow its RMBS business, we believe the vertical integration of a leading mortgage originator like MortgageIT will provide significant competitive advantages, such as access to a steady source of product for distribution into the mortgage capital markets," said Phil Weingord, Head of Global Markets for the Americas. "MortgageIT is a significant lender in the prime Alt-A residential mortgage sector. Uniting their business with our other channels of mortgage loan origination coupled with our trading, structuring and distribution capabilities will further advance our position as a leading RMBS player."
"The MortgageIT team has built an outstanding business, and we are extremely pleased to have them join our effort as we continue to expand our mortgage securitization platform in the US and globally," said Anshu Jain, Head of Global Markets and Member of the Deutsche Bank Group Executive Committee. "We believe there is a tremendous opportunity to provide additional products and services to clients in the US mortgage market. Together with our new colleagues from MortgageIT, we look forward to driving the market's evolution."
"Our company has been an outstanding growth story in residential mortgage lending in recent years. Partnering our industry-leading team with the institutional capital markets expertise and backing of a world-class financial institution like Deutsche Bank is a perfect marriage", said Doug Naidus, Chairman and Chief Executive Officer of MortgageIT. "This transaction will enable us to accomplish our mutual goal of becoming a top player in the US residential lending and securitization markets in short order".
Source: Deutsche Bank