The acquisition consists of CoreVest's operating platform and assets which include its business-purpose loan (BPL) portfolio

Redwood Trust

Image: Redwood Trust to acquire CoreVest. Photo: Courtesy of Gerd Altmann/Pixabay

California-based specialty finance company Redwood Trust has signed an agreement to acquire CoreVest American Finance Lender, a lender to real estate investor, for $490m.

As part of the deal, Redwood Trust will also acquire several of its affiliates from Fortress Investment Group’s credit funds business and CoreVest Management Partners.

Redwood will acquire CoreVest’s operating platform and assets which include its business-purpose loan (BPL) portfolio and subordinate bonds from CoreVest-sponsored securitizations, from the sellers.

Redwood plans to fund the deal using a mix of cash on hand and shares of Redwood stock. Redwood stock is payable to the CoreVest executive management team and vest over a two-year period.

The deal is expected to close within the next two or three business days, the company said.

CoreVest platform has more than $900m in financial assets

CoreVest was founded in 2014 in Irvine, California. The company is an originator of single-family rental (SFR), single-family bridge and small-balance multifamily loans, offering debt capital to a broad range of residential real estate investors.

CoreVest operating platform’s acquisition brings over $900m in related financial assets to Redwood Trust. Collectively, the platform and assets expand Redwood Trust’s presence in the business-purpose residential loans (BPLs) market and will extend its position as a leading source of housing-market liquidity.

Since inception, CoreVest has offered more than $4bn in loans, including over $1.1bn for this year-to-date, across its product site.

Furthermore, the lender claims to have an established presence as a securitization issuer, having recently completed its ninth SFR securitization.

Redwood Trust CEO Christopher Abate said: “Today we are pleased to announce the acquisition of the CoreVest operating platform. CoreVest is a best-in-class operator in the business-purpose lending sector, an area of residential lending that increases liquidity in the housing market by enabling investors to efficiently finance purchases of both single-family and multifamily investment properties.

“Additionally, CoreVest is the standard-bearer for BPL securitizations, having completed more such transactions than any other issuer. Integrating the CoreVest operations and suite of products with our own market-leading consumer mortgage banking and securitization platform will create the preeminent specialty finance operator in our industry.”

The deal will also bring several advantages to Redwood’s key corporate strategic initiatives including broadening and diversifying its revenue streams, expanding its capacity to create credit investments, and profitably scaling its infrastructure and operations.