Walter Investment Management Corp. on Monday agreed to buy Green Tree Servicing, St. Paul — a specialty servicer — and its parent company in a deal valued at just over $1 billion.However, the buyer is putting up very little in the way of cash. To complete the purchase, Walter Investment will issue 1.8 million shares of common stock to the seller, assume $20 million of existing Green Tree debt, and issue $765 million of new debt.
Green Tree’s parent company is called GTCS Holdings.
At press time, no information was available on the size of Green Tree’s portfolio, but one source familiar with the company estimated its MSR-related contracts at roughly $40 billion. This source referred to the deal as “buying a future on Green Tree.”
The reference is attached to the hope that the company might be able to subservice a large amount of troubled loans for the GSEs in the future. (At present time, Green Tree has no servicing contracts with Freddie Mac, though it does have a contract with Fannie Mae.)
Walter Investment, a publicly traded REIT, is headquartered in Tampa, Fla., and is involved in servicing and asset management, among other real estate related business lines.
“We believe that with the acquisition of Green Tree, Walter Investment will be uniquely positioned to capture a significant share of the growing specialty mortgage services sector,” said Mark J. O’Brien, Walter’s chairman and CEO. “Green Tree’s businesses, operational strategy, philosophy and culture are much the same as ours, providing opportunities to achieve both revenue and expense synergies as we pursue our common strategic objectives for growing the business and enhancing long-term shareholder value.”
O’Brien said Green Tree has the “ability to generate revenues from recurring, fee-based sources, with high operating margins from an asset-light platform is an especially attractive addition to our existing business model.”