Company Description
We are a newly-organized Maryland corporation formed to invest in and manage a
leveraged portfolio of agency mortgage-backed securities, non-agency mortgage-
backed securities and other mortgage-related investments, which we refer to as
our target assets.
We will seek attractive long-term investment returns by investing our equity
capital and borrowed funds in our targeted asset class. We plan to earn returns
on the spread between the yield on our assets and our costs, including the cost
of the funds we borrow, after giving effect to our hedges. We plan to identify
and acquire our target assets, finance our acquisitions with borrowings under
a series of short-term repurchase agreements at the most competitive interest
rates available to us and then cost-effectively mitigate our interest rate and
other risks based on our entire portfolio of assets, liabilities and
derivatives and our management's view of the market. Successful implementation
of this approach requires us to address and effectively mitigate interest rate
risk and maintain adequate liquidity. We believe that the residential mortgage
market will undergo significant changes in the coming years as the role of
GSEs, such as Fannie Mae and Freddie Mac, is diminished, which we expect will
create attractive investment opportunities for us.
We will commence operations upon completion of this initial public offering and
the concurrent private placement described herein. We intend to elect to
qualify as a REIT for federal income tax purposes and will elect to be taxed as
a REIT under the Internal Revenue Code of 1986, as amended (the “Code”),
commencing with our taxable year ending December 31, 2012. Our qualification as
a REIT will depend on our ability to meet, on a continuing basis, various
complex requirements under the Code relating to, among other things, the source
of our gross income, the composition and values of our assets, our distribution
levels and the concentration of ownership of our capital stock. We also intend
to operate our business in a manner that will permit us to maintain an
exclusion from registration under the Investment Company Act of 1940, as
amended (the “1940 Act”).
As a REIT, we generally will not be subject to federal income taxes on our
taxable income to the extent that we annually distribute all of our taxable
income to stockholders and maintain our intended qualification as a REIT. If we
fail to qualify as a REIT in any taxable year and do not qualify for certain
statutory relief provisions, we will be subject to federal income taxes at
regular corporate rates. Even if we qualify as a REIT for federal income tax
purposes, we may still be subject to some federal, state and local taxes on our
income.
Our success will depend, in large part, on our ability to acquire assets at
favorable spreads over our borrowing costs. In acquiring our target assets, we
will compete with mortgage REITs, mortgage finance and specialty finance
companies, savings and loan associations, banks, mortgage bankers, insurance
companies, mutual funds, institutional investors, investment banking firms,
other lenders, governmental bodies and other entities. Many of these
organizations have greater financial resources and access to lower costs of
capital than we will have. In addition, there are numerous mortgage REITs with
similar asset acquisition objectives, including our target assets, and others
may be organized in the future. The effect of the existence of additional REITs
may be to increase competition for the available supply of mortgage assets
suitable for purchase.
----- We were incorporated in the state of Maryland on June 18, 2012. Our principal offices are located at 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963. Our phone number is (772) 617-4340. Our website is www.javelinreit.com.
