Chimera Investment Corporation (NYSE: CIM) has announced a definitive agreement to acquire Palisades Group, a U.S.-based alternative asset manager focused on residential real estate credit. Established in 2012, Palisades specializes in managing and investing in various residential real estate assets. Following the acquisition, Jack Macdowell, Jr., co-founder and Chief Investment Officer of Palisades, will take on the role of Chief Investment Officer at Chimera.
Under the terms of the agreement, Chimera will pay $30 million in cash at closing, with the potential for an additional earnout of up to $20 million over five years, contingent on meeting specific financial targets. Chimera may choose to pay 50% of the earnout in common shares to align interests with its shareholders. The transaction is expected to close in the fourth quarter of 2024, pending customary closing conditions.
“We are excited to welcome Palisades to the Chimera team,” stated Phillip J. Kardis II, President and CEO of Chimera. “Palisades has a robust history in residential credit, offering tailored asset and credit risk management solutions to institutional investors and insurance companies, along with investment advisory services for private credit funds. This acquisition is anticipated to enhance our residential credit capabilities, allowing us to manage assets for third parties and invest private capital, making it accretive to Chimera’s earnings in 2025.”
Strategic Rationale and Benefits for Chimera Shareholders
- Attractive Fee-Based Business Model: Diversifies income streams and allows for growth in a “capital-light” manner.
- Increased Size and Market Presence: The combined entity will manage over $30 billion in notional loans and real estate assets, enhancing investment expertise and partnerships with leading clients.
- Complementary Teams: The acquisition adds 36 experienced professionals to Chimera, expanding its operational and loan risk management capabilities and further strengthening its residential loan portfolio analysis.
Advisors
Houlihan Lokey served as the exclusive financial advisor to Chimera, while Hunton Andrews Kurth LLP acted as legal counsel for Chimera. Mayer Brown LLP provided legal counsel for Palisades Group.
Investor Presentation
A supplemental investor presentation detailing the transaction will be available on Chimera’s website at www.chimerareit.com.
About Chimera Investment Corporation
Chimera is a publicly traded real estate investment trust (REIT) engaged in investing in a diversified portfolio of real estate assets, including mortgage loans and various types of real estate-backed securities.
