The Dallas Morning News

Caliber sells in $1.7B deal

Transactio­n creates nation’s 5th-largest lender for real estate

- By PAUL O’DONNELL Staff Writer podonnell@dallasnews.com

Caliber Home Loans, the Coppell-based home mortgage giant, is being sold for $1.675 billion in a consolidat­ion play that creates the nation’s fifthlarge­st lender serving the stillhot real estate market.

Caliber’s owner, Dallasbase­d Lone Star Funds, announced the cash deal Wednesday with New Residentia­l Investment Corp., a financial services firm headquarte­red in New York that operates mortgage lender and servicer Newrez.

The transactio­n is expected to close in the third quarter.

“We believe this is a terrific acquisitio­n for our company,” said New Residentia­l chairman and CEO Michael Nierenberg in a statement. “The combinatio­n of Newrez and Caliber’s platforms will create a premier financial services company with scale, talent, technologi­es and products.”

Later, in a conference call to discuss the deal, Nierenberg said: “This is going to really help us get back to where we were PRE-COVID, grow our earnings, grow our book value and I think create great shareholde­r value over time.”

Bloomberg Intelligen­ce analyst Ben Elliott described the acquisitio­n as a “bargain” for New Residentia­l.

“The combined entities would service $576 billion in unpaid principal and originate $142 billion a year, collective­ly

the fifth-largest lender nationally, and bolster Newrez’s margins with a substantia­l improvemen­t in mix, recapture rates and technology,” Elliott wrote.

Caliber reported pre-tax income of $891 million last year, just slightly less than New Residentia­l’s pre-tax income of $934 million.

According to Housing Wire, Caliber ranked as the nation’s sixth-largest originator of home loans and refinancin­gs in 2020.

Nierenberg told analysts that he expects the companies to function separately during the initial integratio­n before combining operations. Executives were vague about who will run the combined company.

Caliber, led by CEO Sanjiv Das, initially filed to go public last fall but later withdrew its IPO, citing uncertain market conditions driven by a spike in COVID-19 infections and the contentiou­s U.S. presidenti­al election. The company employs nearly 6,000 workers.

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