Local real estate and private equity investors Richard and Todd Pickup have increased their already sizeable stakes in Impac Mortgage Holdings Inc. following a $56 million stock sale by the Irvine-based lender.
Entities affiliated with the Pickups were part of a group of investors that last week bought nearly 4.4 million shares of Impac’s stock at $12.66 in a registered direct offering that raised $55.4 million in proceeds for the company, which has recently been expanding its servicing portfolio and nonqualified mortgage production business lines.
Others joining the Pickups in the stock purchase include one other prior institutional investor in Impac, Sausalito-based Talkot Capital LLC, according to a company statement.
The amount of money the Pickups invested in the company last week was undisclosed, but the deal appears to push the two family members’ combined stakes from about 37% to nearly 50%.
As of late February, Todd and Richard Pickup and their respective affiliates beneficially owned about 15.5% and 21.6% of Impac’s outstanding common stock, according to regulatory filings, and were the only investors with more than a 10% stake, regulatory filings show.
Impac’s market value is about $225 million. Its shares at one point jumped more than 10% last week following news of the latest investment, which closely follows a $37 million fundraising deal in September.
Last year’s deal was the largest stock offering Impac has made since the last housing bust. It was one of the few large lenders based here that survived the downturn.
Its stock currently trades at about $14.25 per share.
From Stock to Hotels
Richard Pickup is a longtime equities investor whose prior holdings include significant stakes in formerly local companies, such as Epicor Software Corp. and the parent company of fast food chain Carl’s Jr.
He and his son, Todd, later moved into real estate, focusing on hotel and resort properties.
Todd Pickup runs Irvine-based Eagle Four Partners, a private equity group that specializes in hospitality, golf, and residential real estate developments, along with Kevin Martin, Richard Pickup’s son-in-law.
Eagle Four investments include stakes in a number of hotels with ties to Irvine-based Pacific Hospitality Group, including Huntington Beach’s Paséa Hotel and Spa and the Bacara Resort and Spa in Santa Barbara, which was reportedly put up for sale this year.
The Pickup family members also own and operate Balboa Resort and Newport Beach Country Club, which they bought in 2012. The family has been a large shareholder in Impac for over three years, according to regulatory filings.
CashCall Boost
Impac’s new capital raise “will be used to continue to expand the growth of our servicing portfolio and assist us on our anticipated return to the securitization market with our rapidly growing NonQM production,” said Chairman and Chief Executive Joseph Tomkinson.
Nonqualified mortgages, also known as NonQM, are loans “for borrowers with good credit who may not meet the qualified mortgage guidelines set out by the Consumer Financial Protection Bureau,” Impac’s latest annual report says. It began rolling out its NonQM program in 2014.
About 9% of all mortgage originations last year were for NonQM borrowers, according to a recent report by the American Bankers Association. High debt-to-income levels and insufficient documentation are the two main reasons borrowers seek that type of financing, the report said.
In 2015, Impac bought a bulk of the operations of then Orange-based CashCall Mortgage, a retail lender that offers NonQM loans and has been the source of much of its mortgage originations for that product type.
Tomkinson said last week that some of the newly raised funds could be used to “take advantage of strategic opportunities presented to us,” although no specific acquisitions or other deals are in the immediate plans.
An increase in NonQM loans has also resulted in Impac boosting its loan servicing portfolio, which totaled about $13 billion in February.
Tomkinson said during the company’s last quarterly call with analysts in late February that Impac’s servicing portfolio should reach $20 billion by the end of June.
As 2016 closed, Impac’s servicing portfolio had a weighted average coupon of 3.7%, a weighted average loan-to-value of 65% and a weighted average FICO score of 741, the company said.
The average FICO score in the U.S. stands at about 695, according to industry data.
