NEW YORK–(BUSINESS WIRE)–Chimera Investment Corporation (NYSE: CIM) today announced that it has entered into a definitive agreement to acquire Palisades Group, a U.S.-based alternative asset manager specializing in residential real estate credit. Founded in 2012, Palisades manages and invests in residential real estate assets across a broad spectrum of credit products. Upon closing, Jack Macdowell, Jr., co-founder and Chief Investment Officer of Palisades, will become Chimera’s Chief Investment Officer.
Under the terms of the agreement, Chimera will acquire Palisades for cash consideration of $30 million at closing, plus an additional potential earnout of up to $20 million over five years contingent upon achieving certain financial targets, with the option for Chimera to pay 50% of the earnout payments in common shares, aligning interests with those of Chimera’s shareholders. Chimera expects to close the transaction during the fourth quarter of 2024, subject to the satisfaction of customary closing conditions.
“We are thrilled to welcome Palisades to the Chimera team,” said Phillip J. Kardis II, President and Chief Executive Officer of Chimera. “Palisades has a strong history in residential credit, providing customized asset and credit risk management solutions to large institutional investors and insurance companies, as well as investment advisory services to private credit funds. They have an excellent management team and seasoned investment professionals. Complementing Chimera’s permanent equity capital, this transaction is expected to broaden our residential credit reach to include managing assets for third parties and raising and investing private capital. We expect this acquisition to be accretive to Chimera’s earnings in 2025.”
Strategic Rationale and Benefits to Chimera Shareholders
- Attractive Fee-Based Business Model
- Diversifies Chimera’s income streams.
- Ability to grow in a “capital-light” manner.
- Increases Size, Scale, and Market Presence
- Over $30 billion of notional loans and real estate assets will be owned, advised, or managed on a combined basis.
- Adds investment and product expertise and sourcing channels.
- Brings strong partnerships with leading investment management and insurance company clients.
- Private credit funds add synergistic pool of investment capital alongside Chimera’s permanent balance sheet capital.
- Highly Complimentary Teams
- Adds thirty-six professionals with a strong history in operational and loan risk management.
- Expands depth in all facets of investment and asset management activities.
- Further strengthens Chimera’s ability to analyze and optimize residential loan portfolios.
Advisors
Houlihan Lokey acted as the exclusive financial advisor to Chimera and Hunton Andrews Kurth LLP served as legal counsel to Chimera. Mayer Brown LLP served as legal counsel to Palisades Group.
Investor Presentation
A supplemental investor presentation on the transaction will be available on Chimera’s website www.chimerareit.com.
About Chimera Investment Corporation
Chimera is a publicly traded real estate investment trust, or REIT, that is primarily engaged in the business of investing directly or indirectly, on a leveraged basis, in a diversified portfolio of real estate assets, including mortgage loans, Agency RMBS, Non-Agency RMBS, Agency CMBS, business purpose and investor loans, and other real estate assets.
