TCW Plans Offering to Create Real Estate Trust
Los Angeles money manager Trust Co. of the West will create a new entity to acquire and manage home loans and other mortgage-backed securities through a $184-million public offering, according to documents quietly filed with the Securities and Exchange Commission.
The move to create the publicly traded company comes just four months after TCW, which manages more than $50 billion in assets, announced it had decided to remain independent and privately owned.
The new venture, Apex Mortgage Capital Inc., will be a real estate investment trust, or REIT, and will be sold to the public by investment banks Merrill Lynch & Co., PaineWebber Inc. and Sutro & Co. Apex will acquire or create its own package of fixed-rate and adjustable-rate mortgage-backed securities, according to SEC filings made Tuesday.
TCW is a highly regarded name in the money management world and one of the largest money managers in California. Former U.S. Secretary of State Henry Kissinger is a director. The employee-owned firm was founded in Los Angeles by TCW Chairman Robert A. Day, the publicity-shy grandson of the founder of Superior Oil Co.
In its SEC filing, TCW said Philip Barach, 45, a former director at TCW and former head of fixed income at the California Public Employees’ Retirement System, will be president and chief executive of the new company.
“These types of REITs are very volatile,” said Jon Fosheim, an analyst with Green Street Advisors Inc., a Newport Beach firm that tracks REITs. “They borrow short and lend long.”
In its filing, the company said it plans to sell 11.5 million shares at $16 a share.
Currently popular on Wall Street, REITs are a way for companies to get top dollar for commercial, apartment and industrial properties by spinning off these assets into publicly held companies. Investors see REITs as an attractive investment alternative.
Mortgage REITs, like the one TCW is planning to create, can lend real estate developers money or borrow from banks and reloan that money at higher rates rather than own buildings outright.
TCW, which has a history of avoiding publicity, filed its plans to complete a REIT in a “silent SEC filing,” which means there is no announcement or major printing of offering documents. Company officials at TCW could not be reached for comment.
“A silent filing is not marketed or disseminated; it’s typically done so that attention is not drawn to the filing,” said one Los Angeles securities lawyer. “Usually, you just aren’t ready to market or you only want a short marketing period for the securities.”
TCW has suffered some high-profile woes in recent years that started with the 1994 Mexican peso devaluation, which hurt values of some of TCW’s top funds. Some of its money managers--especially for the mutual funds it manages for Dean Witter--have posted lackluster returns.
This year, however, TCW raised $1 billion for a new high-yield fund and closed a $300-million Taiwanese fund.